Exxon Planning Board, Other Changes Amid Activist Pressure--3rd Update
January 27 2021 - 12:04PM
Dow Jones News
By Cara Lombardo, Emily Glazer and Dana Cimilluca
Exxon Mobil Corp. is preparing to make changes to its board and
adopt further measures to reduce its carbon footprint as the
beleaguered energy giant faces pressure from a pair of activist
investors.
The company is discussing adding one or more new directors to
the board and stepping up sustainability investments, people
familiar with the matter said. Irving, Tex.-based Exxon, which has
been reducing its overall capital spending, could also curtail it
further.
Exxon is in talks with one of the activists, D.E. Shaw Group,
which may end up supporting the moves, some of the people said.
Meanwhile, the other, Engine No. 1 LLC, is moving forward with a
planned proxy fight for four board seats, it said Wednesday.
Exact details couldn't be learned and the talks with D.E. Shaw
could still fall apart. Like other activists, D.E. Shaw sometimes
employs nonbinding handshake agreements with the companies it
targets to avert a proxy fight.
The company said in a statement in response to the Engine No. 1
move that it has engaged with the firm since mid-December and that
its board-affairs committee will evaluate the nominees. "ExxonMobil
will continue to update shareholders in the coming weeks on the
company's strategy to build long-term, sustainable value for
shareholders," the company said. "It will also provide updates on
company performance and actions to address climate change,
including initiatives to commercialize technologies which are key
to reducing emissions and meeting societal goals consistent with
the Paris Agreement."
Exxon could announce the changes as soon as next week, possibly
with its fourth-quarter earnings Tuesday, the people said, though
there is no guarantee it will do so.
The company is expected to report its fourth straight quarterly
loss, the longest such losing streak in its modern history.
Prior to the pandemic, Exxon Chief Executive Darren Woods
embarked on an ambitious strategy to spend more to increase
production. The sharp drop in demand for fossil fuels since then
triggered billions of dollars of losses for the company. In
November, Exxon pulled back from Mr. Woods' plan to boost its
overall oil-and-gas production by one million barrels a day by
2025. The company said it would cut billions of dollars from its
capital expenditures over the next five years and invest only in
its best assets.
Adding to the pressure, the Securities and Exchange Commission
is investigating whether Exxon is overvaluing one of its most
important oil-and-gas properties, The Wall Street Journal recently
reported.
Investors have been pressuring Exxon to boost its lagging share
price, and the activists have pushed for moves that include
reducing capital expenditures and expanding in renewable energy.
Exxon's shares are down about 30% in the past year.
BlackRock Inc. Chief Executive Larry Fink this week asked
companies to disclose more information on how they are moving to
reduce greenhouse-gas emissions, adding another pressure point for
Exxon given that the investing giant is one of its biggest
shareholders.
Newly established Engine No. 1 said Wednesday it nominated four
previously announced board candidates. It said in December it
planned to make the nominations with the support of California
State Teachers' Retirement System, the big pension investor.
Together they control less than 0.3% of Exxon, which has a market
value of about $193 billion, so the outcome of their campaign will
depend on whether they get buy-in from more significant
investors.
Engine No. 1 and Exxon have held informal talks, but have so far
failed to agree. That potentially sets up a drawn-out and expensive
battle as the two sides campaign for shareholder support for their
board candidates, culminating in a vote at the company's annual
meeting this spring.
Engine No. 1 was launched by technology investor Chris James
late last year with $250 million under management. Its focus is on
so-called impact investing, which seeks to push companies to make
changes that will be beneficial in the long run to stakeholders
such as workers and shareholders alike.
Its nominees include Gregory Goff, the former CEO of refiner
Andeavor, which was sold to Marathon Petroleum Corp ., and three
other executives with energy ties.
D.E. Shaw, a hedge fund best known for its quantitative trading,
is an occasional activist, having picked fights at companies
including at Emerson Electric Co. and Lowe's Cos.
Christopher M. Matthews contributed to this article.
Write to Cara Lombardo at cara.lombardo@wsj.com, Emily Glazer at
emily.glazer@wsj.com and Dana Cimilluca at
dana.cimilluca@wsj.com
(END) Dow Jones Newswires
January 27, 2021 11:49 ET (16:49 GMT)
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