The Advisory Representative supports the call for activists for the Exxon board’s review
ExxonMobil suffered a backlash from investors at its monthly meeting after the Institutional Advisory Representative Services recommended voting for three of the four new board members appointed by a media fund activist, putting pressure on chief executive Darren Woods.
Funds, 1st engine, has he asked for a review of the board and major changes Exxon’s strategy on climate, capital allocation and executive compensation.
The May 26 vote is becoming the most important contest against the history of U.S. corporations and will reveal the extent of concerns about climate risks posed by fossil fuel producers.
The ISS’s advice, which was conveyed to shareholders on Friday, said that Engine 1 had made a “strong case for change” and suggested that Exxon’s strategy was based on rosy assumptions about future oil consumption.
The company “bases its strategy decisions on the fact that demand and technology assumptions are too optimistic, and does not provide shareholders with sufficient information to understand how it is actually prepared for the energy transition.”
Exxon’s “energy transition strategy appears to be based on carbon sequestration, which is likely to require viable government support,” he added.
The ISS recommended voting for Gregory Goff, Kaisa Hietala, and Alexander Karsner on the Engine No. 1 list, saying they offered significant industry experience and an energy transition experience. He did not support a fourth candidate, Anders Runevad, a former head of wind energy at Vestas.
Engine No. 1 said the ISS’s recommendation is to reaffirm its belief that it calls for “a committee that brings together people with significant experience and skills in the energy industry to respond to ExxonMobil’s core issues”.
The ISS statement gives a big boost behind the five-month fund proxy campaign.
On Wednesday, UK Pensions & Investment Research Consultants, another advisory board, appointed four directors to the fund and recommended voting against five Exxon board members, including Woods. Glass Lewis, another shareholder advisor, has yet to make a recommendation.
Calstrs, Calpers and the Commonwealth of New York State Retirement Fund – the three largest pension funds in the U.S. – and Asset Manager Legal & General Investment Management, another shareholder in Exxon, have all said they will vote for Motor List 1.
Exxon’s three largest shareholders, BlackRock, State Street and Vanguard, have not expressed any intention to vote. In January, BlackRock chief Larry Fink made the risks of climate change his main issue annual letter to CEOs.
In response to investor pressure this year, Exxon has appointed a number of new board members; 3. emissions from the area, or from the incineration of its products; and announced a new low-carbon line of business and a $ 100,000 million carbon capture concept in Houston.
As a result of spending and debt piles facing investor anger, it reduced its planned capital expenditures and moved away from the plan to rapidly increase oil production over the next four years in March.
The ISS acknowledged these efforts, saying that Exxon had shown a “willingness to commit” to the shares since the entrepreneur’s pressure began.
While Exxon’s oil producer in Europe has begun to build rivals’ clean energy capacity, so have US producers he confronted any pivot that was far from oil and gas.
Woods said, “We’re not in the business of generating electricity.” he told FT recently. “What can we bring to those options other than the checkbook?”
Exxon has focused technology like carbon capture and biofuels, although none of them have achieved sufficient scale despite investments in the company’s years.
After losing four consecutive quarters last year, it returned to profitability in the first three months of 2021. Its stock has surpassed more than its opponents this year and has risen by almost 50 per cent since the 1st engine launched its campaign.
The ISS attributed the stock’s performance to shareholder pressure, “rather than the long-term strategy decisions taken by the board”.
Ceres oil and gas director Andrew Logan, who coordinates climate action for investors, praised the advisers’ “benchmark decision”.
“This should create a sense of urgency in every board of the oil company. Exxon is the primary target for entrepreneurs, but it will not be the last,” he said.