Green activist investors score third seat on Exxon’s 12-member board

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Green activists win THIRD seat on Exxon’s 12-member board of directors and will now try to force oil giant to cut emissions and review wages

  • Activist hedge fund Engine No. 1 appeared to secure a third seat on the fossil fuel giant’s board of directors, the company announced on Wednesday.
  • Alexander Karsner, senior Google strategist, joins environmental scientist Kaisa Hietala and former Andeavor CEO Gregory Goff on the 12-member board
  • One of the main objectives of Engine No. 1 is a bigger investment in clean energy
  • The success was part of an increase in investor concerns about environmental, social and governance issues

Exxon’s shareholders have elected a third executive appointed by activist hedge fund No. 1 to the energy company’s board of directors, extending the investment firm’s stunned victory over the top US energy company.

Alexander Karsner, a strategist at Google-owned Alphabet Inc., joined fellow Engine No. 1 nominees Gregory Goff, a former chief executive officer at Andeavor petroleum refinery, and environmental scientist Kaisa Hietala on Exxon’s 12-member board of directors.

The company’s key goals include increased investment in clean energy to better meet emissions reduction targets, as well as a review of management’s compensation incentives.

The win was the result of a month-long campaign to win over major shareholders and its success is part of a “tidal wave” of investor concern over environmental, social and corporate governance issues, said Exxon CEO Ursula Burns, who spoke at a Federal Reserve Bank of Dallas Virtual Event Wednesday night.

Activist investor hedge fund Engine No.  1 took another win on Wednesday when shareholders elected Alexander Karsner, a strategist at Google-owned Alphabet Inc., to Exxon's 12-member board of directors.

Activist investor hedge fund Engine No. 1 took another win on Wednesday when shareholders elected Alexander Karsner, a strategist at Google-owned Alphabet Inc., to Exxon’s 12-member board of directors.

Gregory Goff

Kaisa Hietala

The win comes after Engine No. 1 managed to elect Gregory Goff (left) and Kaisa Hietala (right) to Exxon’s board last Wednesday after a battle with other shareholders

The company’s response to environmental criticism “hasn’t been done right,” Burns said, adding “that’s one of the things we need to work on,” pointing to its investments in carbon capture and storage technologies. . Burns was one of the directors who managed to secure a seat last week.

“We look forward to working with all of our directors to build on the progress we have made to increase long-term shareholder value and succeed in a low-carbon future,” said Exxon Chief Executive Darren Woods in a statement. .

Woods, who campaigned against the challenger, was re-elected with 94.1%, a wider margin than a year ago. A non-binding shareholder proposal asking the company to split the CEO and chairman roles was backed by 22.1%, compared to 32.7% last year, according to preliminary figures released on Wednesday.

The three new board members face an insular corporate culture known for its slow pace of change. Karnser, Goff and Hietala will be three voices on a 12-member board with six directors handpicked by Woods.

The victories by Engine No. 1’s slate mean directors Steven Kandarian, Samuel Palmisano and Wan Zulkiflee will leave the board, the company said. Former head of Malaysian state oil company Zulkiflee was appointed in February after Exxon was harshly criticized that its executives lacked energy experience. Former IBM CEO Palmisano was the longest-serving director on the board at 15 years.

The two new board members face an insular corporate culture known for slow change.  Above, ExxoxMobil's Baton Rouge Refinery in Louisiana

The two new board members face an insular corporate culture known for slow change. Above, ExxoxMobil’s Baton Rouge Refinery in Louisiana

The fourth nominee from Engine No. 1, Anders Runevad, former chief executive officer of Vestas Wind Systems, did not seem to gather enough votes to sit on the board.

The counts remain tentative, as the count continues a week after Exxon’s annual meeting, where the company slowed down proceedings by taking a pause, a move suggested by Engine No. 1 was criticized as a pretext for continuing to solicit votes.

Shares of Exxon rose 0.79% at the closing bell on Wednesday.

Despite the wins, some warned that big changes may not be coming for a while.

“People who expect substantive changes at (Exxon) soon will likely be deeply disappointed,” said Mark Stoeckle, senior portfolio manager at Adams Funds. “XOM’s repositioning from an oil-focused company to a climate-change-focused company will take a very, very long time.”

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