Exxon’s Future May Be Decided By This Investor Showdown

A board election at the Exxon Mobil’s (XOM) shareholder meeting Wednesday has turned into a referendum on the company’s future as climate change takes center stage among investors. Exxon stock rose.


Activist investor Engine No. 1 wants the oil major to take a more proactive approach to climate change, which it believes will have major ramifications for Exxon stock.

In particular, it wants Exxon to pledge to reduce its emissions to net-zero by 2050 and wants to replace four board members with its candidates, forcing Exxon to take the climate threat more seriously.

While Engine No. 1 controls just a 0.02% stake, major Exxon stock investors like pension funds Calpers, CalSTRS, and the New York state retirement fund back its board slate. Norway’s sovereign wealth fund said it will back Exxon but wants the oil giant to split the chairman and CEO roles.

“I don’t see how Darren Woods remains as CEO if one of the dissidents, let alone all four, are elected,” said Andrew Logan, director of oil and gas at Ceres told Bloomberg. “It would be such a sign of fundamental dissatisfaction with the status quo that something would have to change. And that starts with the CEO.”

In an attempt to appease Engine No. 1, Exxon announced that it would add two new directors over the next year, including one with climate experience.

But the hedge fund pushed back on the move Monday, saying that the “board that continues to only be open to new directors that it approves, rather than trusting the shareholder vote.” The group also said that Exxon has still not met with its nominees.

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Exxon Stock

Shares rose 1.2% to 59.66 n the stock market today as crude oil prices rallied. Exxon stock briefly cleared a 62.65 buy point from a cup base earlier this month, but later fell more than 7% from the entry to trigger a sell signal, according to MarketSmith analysis. The buy point is no longer valid.

Chevron (CVX) shares were up 1.4% to 105.59. Royal Dutch Shell (RDSA) edged up 0.8% and BP (BP) climbed 1.7%.

The International Energy Agency rattled the oil and gas industry earlier this month after releasing a report that recommended stopping new exploration and spending on new fossil fuel projects in order to meet the goals outline in the Paris Climate Agreement.

Chevron also faces a vote on emission-cut proposals at its shareholder meeting Wednesday.

European oil majors have been under immense pressure from governments as well as their shareholders to reduce emissions.

The majority of Royal Dutch Shell investors voted in favor of the company’s Energy Transition Strategy to reach net-zero emissions by 2050. But 11% voted against the strategy pushing for an even more radical roadmap.

BP has said it would slash emissions but hasn’t yet outlined how it would achieve its climate goals.

Follow Gillian Rich on Twitter for energy news and more.


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