Remember that shareholders almost never exercise their power as owners when you think about yesterday’s news from ExxonMobil (XOM).
On Wednesday, May 26, ExxonMobil shareholders voted to install at least two new independent directors to the company’s board. (The contest for another two seats remained, as they say, too close to call.)
The results are a resounding defeat for CEO Darren Woods and a strong vote of shareholders’ unhappiness with the way the company had been addressing climate change. And, let’s not forget, the company’s lagging financial performance. ExxonMobil shares have lost roughly $125 billion in market capitalization during CEO’s Woods four-and-a-half years at the helm.
The proxy campaign resulted in the election of at least two dissident directors to the board was led by a small hedge fund called Engine No. 1. But the effort quickly won the backing of the three biggest U.S. pension funds, the two biggest advisory services, and at least one (BlackRock) of the three biggest fund managers. The three fund managers — BlackRock, Vanguard and State Street — hold more than 20% of ExxonMobil’s shares.
CEO Woods had tried to head off this result by announcing a new low-carbon fuel division, and a plan for a massive carbon capture project near the Houston ship channel. Now that those efforts have turned out to be inadequate, it will be “interesting” to see what new strategy ExxonMobil adopts on climate change.
Yesterday’s vote at ExxonMobil wasn’t the only winning shareholder proposal on climate change. Shareholders at Chevron (CVX) gave 61% of their votes in favor of a proposal asking the oil major to cut its total greenhouse gas emissions. Significantly, the proposal called for Chevron to cut not only the emissions for its own operations and supply chain but from customers too. (What carbon accounting calls Scope 3 emissions.)
