Exxon loses two board seats to activist hedge fund

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FILE PHOTO: An Exxon gas station is seen in Houston, Texas, U.S., April 30, 2019. REUTERS/Loren Elliott

May 26, 2021

By Jennifer Hiller and Svea Herbst-Bayliss

(Reuters) – A tiny hedge fund won a seismic victory over Exxon Mobil Corp on Wednesday as shareholders elected two of the fund’s nominated directors to the oil giant’s board after a months-long battle over the company’s business strategy and growth plans.

The election of two of activist hedge fund Engine No. 1’s candidates Exxon’s board stands as a big loss for Exxon, which had sought to stave off investors aiming to reshape the board to better align the company with global moves to combat climate change.

Two of Engine No. 1’s board nominees, Gregory Goff and Kaisa Hietala, were elected to Exxon’s board, with counting continuing.

The dissident shareholder group led by Engine No. 1 sought to replace as many as a third of Exxon Mobil Corp’s 12-member board of directors at the shareholder meeting, the first major boardroom contest at an oil major that makes climate change the central issue.

Exxon has lagged other oil majors in its response to climate change concerns, forecasting many more years of oil and gas demand growth and doubling down on investments to boost its output – in contrast to global rivals that have scaled back fossil fuel investments.

Investors led by Engine No. 1 have said the world is changing quickly as governments and companies move to reduce the emissions from fossil fuels that are warming the planet, and that Woods needs to make big changes to ensure Exxon’s future value to investors.

Engine No. 1, which has put up a slate of four nominees, has successfully rallied support from institutional investors and shareholder advisory firms upset with Irving, Texas-based Exxon for its weak financial performance in recent years. It has just a $50 million stake in Exxon, which carries a market value of nearly $250 billion.

BlackRock Inc, Exxon’s second-largest shareholder, joined the dissidents, as it will support three of Engine No. 1’s nominees, Reuters reported on Tuesday.

Exxon has fought to keep climate activists at bay, spending tens of millions of dollars on a high-profile PR campaign, agreeing to publish more details of its emissions and coming out in support of carbon reduction. Activists have said it is too little, too late, and that Exxon needs a less reactive strategy.

“This proxy fight reflects this broad change in how our political leaders, our business leaders and our fellow shareholders are stepping up and taking these immense risks seriously,” New York State Comptroller Thomas DiNapoli said.

The state’s pension fund in April said it backed Engine No. 1’s slate.

Graphic: Exxon returns lag global peers, https://fingfx.thomsonreuters.com/gfx/ce/xegpbddwxpq/Pasted%20image%201621953583853.png

(Reporting by Jennifer Hiller in Houston and Svea Herbst-Bayliss in Boston; additional reporting by Gary McWilliams and Ross Kerber; writing by David Gaffen; editing by Will Dunham)





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