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Activist firm Engine No. 1 claims third Exxon board seat

A view of the ExxonMobil Baton Rouge Refinery in Baton Rouge, Louisiana, May 15, 2021.

Kathleen Flynn | Reuters

A third Exxon board seat has been claimed by Engine No. 1, the activist firm that’s been targeting the oil giant over its dependence on fossil fuels, the company said in a statement Wednesday.

The announcement, which is still based on preliminary results, follows the upstart activist firm gaining two board seats at Exxon’s annual shareholder meeting on May 26. The vote over the third seat was too close to call at the meeting’s conclusion.

“We look forward to working with all of our directors to build on the progress we’ve made to grow long-term shareholder value and succeed in a lower-carbon future,” Exxon Chairman and CEO Darren Woods said in a statement Wednesday.

Engine No. 1, which has a 0.02% stake in Exxon, has been targeting the company since December, pushing it to reconsider its role in a zero-carbon world.

Last week’s vote followed months of back-and-forth between Engine No. 1 and Exxon. The activist firm nominated four independent director candidates and won support from large pension funds, including CalPERS, CalSTRS and the New York State Common Retirement Fund.

The annual shareholder meeting spanned several hours and took place in two parts with a roughly one-hour recess between the two due to a number of votes still being cast.

“We are grateful for shareholders’ careful consideration of our nominees and are excited that these three individuals will be working with the full board to help better position ExxonMobil for the long-term benefit of all shareholders,” Engine No. 1 said in a statement Wednesday.

For its part, Exxon’s management has emphasized the steps it is taking toward solidifying its role in a lower-carbon future, including allocating $3 billion for research around carbon capture and other emissions-cutting technologies.

The defeat of Exxon’s proposed candidates suggests that shareholders are considering the oil giant’s place in a world that is shifting away from fossil fuels. The company’s stock is up nearly 50% for 2021, but it’s lagged the broader market over the long-term. Engine No. 1 says Exxon’s future financial stability depends on the company diversifying its operations.

Chevron and Shell are two other oil companies that faced climate pressures last week. Chevron’s shareholders voted against company management on a key climate proposal, while a Dutch court ordered Royal Dutch Shell to take much more aggressive action to drive down its carbon emissions.

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