June 26, 2022

The activist company Engine No. 1 won at least two board seats at Exxon after a historic battle for the oil giant’s board of directors, signaling investor support for greater disclosure by the company as the world turns away from fossil fuels.

The vote on a third candidate proposed by Engine # 1 was too short to call Wall Street from 1:15 p.m.

The group, which owns a 0.02% stake in Exxon, has been targeting the company since December, urging Exxon to reconsider its role in a carbon-free world.

The vote on Wednesday took place during Exxon’s annual shareholders meeting, where CEO Darren Woods answered questions from shareholders ranging from the company’s dividend to Exxon’s investments in carbon capture technology.

The meeting consisted of two parts, with a break of about an hour between the two as some votes were still being cast.

The vote takes place after months of back and forth between engine # 1 and Exxon. The activist firm nominated four independent nominees for directors and has received support from major retirement funds including CalPERS, calSTRS, and the New York State Common Retirement Fund.

On Monday, Exxon announced in a press release that two new directors will be added in the next 12 months, “one with experience in the energy industry and one with experience in climate change.”

But engine # 1 said the changes didn’t go far enough. “What the board needs are directors experienced in successful and profitable energy transformations who can help turn the drive to address the risks of climate change into a long-term business plan without discussing issues,” the company said in one Statement on Monday.

For its part, Exxon’s management has highlighted the steps it is taking to cement its role in a low-carbon future, including allocating $ 3 billion to research into carbon capture and other mitigation technologies.

In March, the oil giant added two new directors to its board, including ESG investor Jeff Ubben, who founded Inclusive Capital Partners. Ubben previously ran the activist company ValueAct, which he founded in 2000.

The battle for Exxon’s board of directors comes as the company’s shares recover from their pandemic lows. Shares are up more than 40% through 2021 and are up 26% over the past year on a rebound in oil prices and aggressive cost-cutting strategies by the company. Still, the stock has nearly halved from its all-time high of over $ 100 in January 2014, and last year the company was removed from the Dow Jones Industrial Average after nearly a century on the index.

Exxon posted a profit in the first quarter of 2021 after four consecutive quarters as the pandemic devastated the oil and gas industry.

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