Activist investor hedge fund Engine No.1 has won a third seat on the supermajor’s board of directors in an unprecedented shift of shareholder sentiment in the oil and gas industry.
“We look forward to working with all of our directors to build on the progress we’ve made to grow long-term shareholder value and succeed in a lower-carbon future,” said Darren Woods, chairman and chief executive of Exxon. “We thank all shareholders for their engagement and participation, and their ongoing support for our company.”
For all these thanks, however, many see Engine No.1’s success with Exxon’s board member election as a game-changer for the oil and gas industry. The hedge fund is a relatively small shareholder with a stake worth $54 million. Yet it managed to convince other, larger shareholders to vote for the candidates it backed. It eventually got three of them on the board.
The vote, according to observers, signals the continued displeasure of a growing number of shareholders with how Exxon is handling the push for lower-carbon energy and calls to do more to mitigate the impact of its business on the environment.
“We called for change at ExxonMobil, and a record number of shareholders, including many of the largest investors in the world, voted to hold the company accountable,” one of the large shareholder backers of Engine No.1’s candidates, CalSTRS, said in a statement on its website following the vote.
The candidates that Engine No. 1 had put forward were directors who had experience in the energy industry transformation and who would factor climate change risks into a long-term business plan instead of “just talking points”.
It is yet to be seen how the new board members will do. In the meantime, Exxon continues pursuing its core business objectives. Earlier this week, the company and its partner Equinor announced the final investment decision on the Bacalhau oil field in Brazil, whose development is estimated to cost some $8 billion.
At the same time, Exxon exited an exploration project in Ghana before even drilling a single exploratory well.
By Irina Slav for Oilprice.com
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