A Third Seat On Exxon Board Won By Investor Engine No. 1

A third director nominated by hedge fund Engine No. 1 was elected to the governing board of the United States based energy giant Exxon Mobil Corp by the company’s shareholders which further added on to the two directors who were appointed by investors of one of the America’s top energy corporations to the company’s board last Wednesday.

The entire energy industry was sent into a shock by the election of two independent directors last week even as the industry struggles to address growing investor concerns about global warming. The election was also a clear signal for the oil major that the investors would no longer accept the years of weak returns.

The third seat for the Engine No. 1 nominee Alexander Karsner on the 12 member board of Exxon was elected by the shareholders, showed a regulatory filing by the energy company. Karsner is a strategist at Google owner Alphabet Inc.

Exxon said that former Caterpillar CEO Douglas Oberhelman and Exxon board member was elected.

“We look forward to working with all of our directors to build on the progress we’ve made to grow long-term shareholder value and succeed in a lower-carbon future,” said Exxon Chief Executive Darren Woods in a statement. He however did not make any further comments on the election.

According to Exxon Director Ursula Burns, who spoke on Wednesday evening at a Federal Reserve Bank of Dallas virtual event, the success of the activist campaign to elect its nominees to the board is also viewed to be a part of a “tidal wave” of concerns of investors over the commitment of energy companies to fight global climate change, and social and corporate governance (ESG) issues.

Burns said that the company’s response to environmental criticisms “has not been well done”.

“That’s one of the thing we have to work on,” Burns added while noting the investments made by the company in carbon capture and storage technologies. Burns was one of the directors who secured a seat last week.

Woods, who campaigned against the challenger, was re-elected by 94.1 per cent votes which was a larger margin compared to his win a year ago. According to preliminary numbers released on by the company Wednesday, 22.1 per cent of the voters, compared to 32.7 per cent last year, supported a non-binding shareholder proposal which urged the oil and gas company to split the CEO and chairman’s roles.

The filing by the company showed that the 12-person board will be exited by directors Steven Kandarian, Samuel Palmisano and Wan Zulkiflee. After Exxon received severe criticism about its directors not possessing enough experience in the energy business, the former Malaysian state oil company chief Zulkiflee was appointed to the board in February. The longest serving director, with 15 years on the board, was the former IBM CEO Palmisano.

“We hope the existing board directors will work with the new non-executive directors and benefit from their significant experience with transition plans and in renewable energy,” said Bess Joffe, at the Church Commissioners for England, which invests for the Church of England.

“People who are expecting substantive changes soon at (Exxon) will likely be sorely disappointed,” said Mark Stoeckle, senior portfolio manager at Adams Funds. “Repositioning XOM from a company focused on oil to one focused on climate change issues will take a long, long time.”

(Adapted from Investing.com)

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