But this is not all. DE Shaw activist hedge fund has built a larger Exxon stake than CalSTRS and the No. 1 engine and pushes the oil company to cut spending to save its dividend and improve its low yield, a person familiar with the question. is not allowed to speak publicly about Exxon’s involvement, he told CNN Business.
“Historically, Exxon hasn’t had to worry too much about shareholders. They now have people who sound the cage,” said Peter McNally, an analyst at Third Bridge Group.
But unlike these fights, Exxon is now facing a campaign to take control of council seats. Engine number 1 revealed four people with strong credentials in the energy industry who agreed to be appointed “if necessary” to the Exxon board.
“For a long time, Exxon was a machine. They just produced cash flows year after year,” said Stewart Glickman, an analyst at CFRA Research. “When a company is struggling in troubled waters, an activist will come.”
Series of wrong steps in Exxon
Engine No. 1, whose executive team includes former JANA partner Charlie Penner and former BlackRock executive Jennifer Grancio, denounced Exxon’s poor performance and suggested the company face an existential crisis. In a letter sent last week to Exxon’s board of directors, the activist group notes that the company’s total shareholder return over the previous three, five and ten-year periods tracks both its representatives and the S&P 500.
“We believe that for ExxonMobil to avoid the fate of other U.S. companies that have been iconic, it needs to position itself better for long-term sustainable value creation,” engine no. 1 a la carte.
Exxon was proud for a long time of being able to spend prudently, even when the oil market boom was not cooperating. But a number of recent missteps have drilled a hole in that argument and now threaten the company’s precious dividend.
Engine No. 1 criticized Exxon for its “poor long-term capital allocation strategy” and called on the company to cut spending.
Before the activists’ letters were made public, Exxon announced a withdrawal from its aggressive spending plans, though not as much as activists want.
Should Exxon Diversify?
The climate crisis continues to hover over the oil giant. DE Shaw is pushing Exxon to improve its environmental reputation and set clear, measurable emissions targets and include them in its compensation plans, the person familiar with the matter said.
Engine No. 1 said Exxon should “fully” explore ways to use its scale and experience by researching growth areas, including “more significant investment in zero-emission energy sources and infrastructure. ‘clean energy’.
In a statement, Exxon said its management and directors “regularly collaborate with our shareholders on a variety of issues and value their constructive outlook.”
“We continue to invest in and research advanced technologies that will play a key role in addressing important issues related to climate change,” Exxon said.
Exxon is vulnerable
“We respect and support the company’s ambition to achieve zero net emissions by 2050,” Darren Woods, CEO of Exxon, said in a statement.
Exxon also pledged to disclose emissions from its products, known as scope 3 emissions. However, the company did not set any targets to reduce these indirect emissions and acknowledged that this report “ultimately it does not encourage reductions by real issuers “.
Climate groups were not satisfied.
“Exxon’s effort falls short,” Logan said.
The No. 1 engine faces an uphill battle as it wins seats on the Exxon dashboard.
But activists have a big advantage: a deeply dissatisfied shareholder base. And if these frustrated shareholders join environmental groups and conscious investors, Exxon could have problems.
“It’s unlikely to succeed,” said Glickman, a CFRA analyst. “But it will be close.”