Engine No. 1 expands its board presence at Exxon

The activist investment firm Engine No. 1 has won the third seat on the Board of Directors at Exxon Mobil Corporation (NYSE: XOM) after gaining two board seats at Exxon’s annual shareholder meeting on May 26.

Shares of the oil and gas giant are relatively flat in premarket trading. The Stock is up almost 47% year-to-date reflecting the steady increase in oil prices and increased economic activity, which should act as tailwinds in the near-term as lockdown measures are relaxed. WTI Crude is up 41% year-to-date and is currently trading at around $68.7 per barrel.

The backstory on the proxy fight

The activist firm has been pressuring the Exxon management since December last year to embrace a faster transition to a low-carbon future and has questioned the company’s track record on sustainability. It also put forward a list of four nominees for Exxon’s board.

Engine No. 1 received the backing of some well-known pension funds such as CalPERS, CalSTRS and the New York State Common Retirement Fund as well as some large investment management and proxy advisory firms.

On May 26, at the annual shareholder meeting of Exxon, two of Engine No. 1’s nominees were elected to the board while the votes for the third candidate were too close to call.

The latest announcement while still preliminary indicates that the activist firm will soon have its third nominee on the board.

The results of the proxy battle highlight that oil companies are behind the curve when it comes to understanding the investors’ seriousness on climate-related issues. 

Each side’s statement

Following the May 26 shareholder meeting, Exxon Chairman and CEO Darren Woods said:

And Engine No. 1 thanked the shareholders for considering its nominees and released the following statement: