NEW YORK – Exxon Mobil shareholders have voted to replace at least two of the company’s 12 board members with directors who are considered better suited to fight climate change, Exxon Exxon’s finances and cleaner energy. Let’s guide you through a transition.
The result, which Exxon called preliminary, was announced by the company after its annual shareholder meeting on Wednesday. Exxon said that due to the complexities of the voting process, inspectors may not be able to certify the final voting results “for some time”. It was not clear that there was even an additional board member in the shareholder vote.
Despite the final tally, the result represents a setback for Exxon’s leadership. This coincides with increasing pressure on publicly traded companies, which critics see as a global crisis.
On Wednesday, a Dutch court ordered Royal Dutch Shell to cut its carbon emissions by a net 45% by 2030 compared to 2019 levels in a landmark case brought by climate activism groups. The court ruled that the energy giant had a duty to reduce emissions and that its current reduction plans were inadequate.
A dissident slate of Exxon’s directors was proposed by a hedge fund called Engine No. 1, stating that the company’s current board was ill-equipped to handle the changes in the energy sector.
The alternative directors put forward by hedge funds also had the support of many of the country’s most powerful institutional investors. The vote reflected a widespread push among consumers, investors and government leaders to move away from fossil fuels and invest in a future in which energy needs are increasingly met with renewable sources.
When the votes were being counted, Exxon stopped the shareholder meeting to give people more time to vote. California Public Employees Retirement System managing director Anne Simpson, better known as CalPERS and one of the institutional investors who supported the directors’ alternative slate, called the move “highly unusual.”
Still, it was a “day of reckoning” for Exxon and investors, Simpson said.
On the hot-button issue of climate change, he said, “Investors are moving from negotiation to action, and it is going to move into board rooms internationally.”
In addition to CalPERS, America’s largest pension fund, other leading institutional investors who joined Exxon’s leadership challenge included the New York State Common Retirement Fund and the California State Teachers Retirement System, known as CalSTRS. Huh.
“This is a historic vote, an important point for companies unwilling to make the global energy transition.”
Investors supporting an alternative group of board members had complained that Exxon had failed to commit itself to substantially cleaner energy, from wind, solar or other sources, compared to some other oil giants.
Companies sometimes work with disgruntled shareholders to accept suggested changes across the board. However, Exxon opposed the challenge. It argued that it was already committed to addressing the climate crisis, with plans to add new board members, including one with expertise in climate change. It also highlighted its plan, still in its early stages, to use the Houston Ship Channel to capture and store carbon dioxide offshore.
The company also said that it is satisfied with its current directors.
“Our current board of directors is one of the strongest in the corporate world,” said Exxon president and chief executive officer Darren Woods, noting that the board provided exceptional guidance for the industry during particularly difficult periods.
Among other problems, oil companies have struggled as the viral epidemic significantly reduced fuel demand. Exxon lost $ 22 billion in 2020 and reported its biggest loss in the fourth quarter.
During a shareholder meeting on Wednesday, Charlie Penner, head of active engagement for Engine No. 1, said that “today’s vote doesn’t matter, it’s a board that needs to look in the mirror.”
The two candidates Exxon said were shareholders selected from the Engine No. 1 slate were Gregory Goff, former CEO of Endeavor, a petroleum refining and marketing company formerly known as Tesoro; And Kaisa Hitala, a former executive vice president of renewable products at Nesse. In that case, Hietala was credited with promoting the company’s renewable diesel and jet fuel offering.
Exxon said it had not yet determined whether Engine No. 1, the third dissident board candidate put forward by Alexander Carsner, was also selected. Karsner, a senior strategist at Alphabet Inc.’s innovation lab, X, has been an investor in energy infrastructure and clean-technology startups.
In addition to electing two disgruntled board members, shareholders elected eight members of Exxon’s board. Exxon said who would fill the remaining two seats on the board was too close to call. There were four people nominated by Exxon and one nominated by Engine No.1 in voting for those two seats.
Exxon did not say when the final result would be released.
Across the economy, climate initiatives are gaining momentum in corporate board rooms. At least 25 climate-related shareholder proposals made it to shareholder ballots this year. Those who voted before the Excon vote received 59% of the shareholders’ support, according to Institutional Shareholder Services.
This is largely up from 2015, when Glass Lewis, a firm that advises institutional investors, reviewed 14 shareholder proposals, seeking additional disclosures on climate-related issues, such as the changing climate or climate. Financial risk posed by regulations related to. None of them were successful.
In 2017, there were 21 shareholder proposals that were voted on; Three received more than 50% approval, Glass Lewis said.