New school

7 December 2020 By Robert Cyran Follow @rob_cyran

The $176 bln oil major has rarely listened to past investor pleas, so demands from a $40 mln stakeholder seems a non-starter. Yet its recent record of capital destruction may be enough for bigger funds to join in. Taking on the oil giant is a way to justify ESG lip service, too.

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Activist fund Engine No. 1 has taken aim at Exxon Mobil, the $176 billion oil firm, asking it for changes as the fossil fuel industry faces long term challenges. The fund run by Chris James sent a letter to the company on Dec. 7 making four requests: that it add independent directors with outside energy experience; apply greater capital allocation discipline that includes lower break-even oil and gas prices; design a plan to invest in growing areas such as renewable energy to diversify and commit to reduced emission targets; and change management incentives.

The activist said it will nominate four directors, and that California State Teachers Retirement System, which owns over $300 million of Exxon’s stock, would support these candidates.

Earlier this month, Exxon said it would write down the value of gas assets it held by $17 billion to $20 billion, which would be its biggest ever impairment. The company’s stock is down about 40% since the start of the year.

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The activist said it will nominate four directors, and that California State Teachers Retirement System, which owns over $300 million of Exxon’s stock, would support these candidates.

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