Exxon Mobil CEO ‘disagrees’ with board recommendations of activist investor

By: Ajay Pal Singh
Ajay Pal Singh
Ajay worked at Tata Motors in project planning before discovering his passion for stocks. Today, he lives in Canada and enjoys… read more.
on May 14, 2021
  • Activist investor Engine No. 1 proposes four new board members.
  • Exxon Mobil CEO disagrees with the recommendations.
  • Leading proxy advisory firms throw their weight behind the recommendations.

Exxon Mobil’s (NYSE: XOM) investor meeting is on May 26 and the company has been facing increasing pressure from activist investor Engine No. 1 to shake up its board since December of last year. 

Engine No. 1 has recommended its own slate of four new directors. With some leading proxy advisory firms throwing their weight behind the recommendations, the company faces heightened pressure.

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Backing from proxy advisory firms just adds to the pressure!

Institutional Shareholder Services (ISS), a leading independent proxy advisory firm, announced that it favors three of the four directors put forward by Engine No. 1. On Wednesday,  Pensions & Investment Research Consultants (PIRC) published its view, backing all four proposed candidates.

Exxon Mobil Chairman and CEO Darren Woods said on CNBC that the company disagrees with the recommendations of ISS and maintained that its board is one of the strongest in corporate America with strong experience across various capital intensive industries.

The ISS and PIRC recommendations carry weight among institutional investors and often guide how the investors will vote at corporate meetings on shareholder proposals.

Engine No. 1 questioned Exxon’s sustainability track record

Regarding the oil giant’s upstream emission intensity, Engine No. 1 maintains that “Exxon Mobil has gone backwards and aims to do worse in 2025 than 2010. Upstream emission intensity has worsened over the last decade, increasing 26% in 2019 vs. 2009”

Woods said that the company has been supporting efforts globally to reduce carbon intensity and emissions and reiterated support for the Paris Climate Agreement. The company has reduced emissions in 2020 by 11% from the 2016 levels and plans to reduce the emissions further.

He further emphasized the company’s plans to meet climate goals and the technologies that it has been investing in for decades to reduce emissions.

Shares of Exxon are up 22% over the trailing six months, helped by the increase in oil prices. The oil (WTI crude) is currently trading at $65.30 per barrel and has been on the rise since November when it was around $40 per barrel.

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