The most valuable company in
the world just eight years ago was Exxon
Mobil. It was a dominant cash flow machine, and
management was under no pressure to take advice from anyone.
Today, however, Exxon
doesn't even crack the top 20 U.S. companies by market value. Its balance sheet
has been bruised and battered by a year of depressed oil prices during the
pandemic. And the society-wide move toward renewable energy sources is only
picking up steam.
Exxon now has to answer to a new kind of demand from
shareholders, and to an extent it never has before. Its annual
shareholders' meeting is tomorrow, and the company is waging a proxy battle
against a group of investors pushing it to more quickly address climate change
by shifting its priorities toward decarbonization. They
have nominated four candidates to Exxon's board who are up for a vote
tomorrow.
It's not just an upstart
group of activists calling for the change. Major institutional investors
including the California
Public Employees’ Retirement System, or Calpers, the
New York State Common Retirement Fund, and the Church
of England have all put their support behind the leader
of the push, a newly formed investment firm called Engine
No. 1. Proxy-advisory firms Institutional
Shareholder Services and Glass-Lewis also
support some of Engine No. 1's director nominees.
Barron's Carleton
English has been covering the
showdown. She noted today that the so-called Big Three investors—BlackRock, State
Street, and Vanguard, who
collectively own more than 20% of Exxon, have all have spoken about the need
for businesses to address climate change. They could be the swing votes
tomorrow that determine the composition of Exxon's board of directors going
forward.
Whatever happens, it's sure
to be an interesting chapter in a rather stale proxy season.
Read the rest of Carleton's
reporting here.
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