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In need of a midwife

5 February 2021 By Robert Cyran

Jeff Ubben’s soft touch would be useful at hardened Exxon Mobil. The activist investor, who co-founded ValueAct Capital and now runs Inclusive Capital Partners, may join the board of the $204 billion oil giant according to Bloomberg. With vocal and quieter agitators at Exxon, shareholders could use a diplomat with a long-term focus. Ubben’s experience at investing in firms from Adobe to Microsoft shows he could prove useful.

Exxon’s long-term vision under Chief Executive Darren Woods that fossil fuels will remain indispensable is increasingly at odds with investors. The company has lagged rivals, especially in Europe, in taking steps to reduce its climate impact. Despite oil’s worsening future prospects and a $22 billion loss last year, the company says future investment in fossil fuel projects may be greater than the $21 billion it spent last year. The value of the company’s shares, including dividends, have shrunk by about a quarter over five years.

Ubben’s record as the head of ValueAct suggests he might be the right person for the job. Adobe and Microsoft, for example, were two tech firms facing an uncertain future. Ubben, who put a ValueAct partner on the board in 2012, helped encourage Adobe to shift to a cloud-based subscription model. The shares have increased over 10-fold since then. Microsoft, under boss Steve Ballmer was wedded to Windows and bad acquisitions. Ubben’s deputy Mason Morfit changed that. As ValueAct’s representative to the board, he helped steer Ballmer out of his role, and under cloud-focused CEO Satya Nadella, Microsoft’s valued has bloomed more than fivefold.

Exxon’s transition will probably be far more difficult. While the company endured some shareholder pressure in 2017 to come clean on carbon impacts, it didn’t change its business. It has activists now, and big shareholders like BlackRock committed to a greener future. But even so, there’s no clear path to grow or change. BP’s shares have underperformed peers since CEO Bernard Looney unveiled his plans to plow money into green energy. Exxon needs a guiding hand with time and patience.

 

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