A view of the Exxon Mobil Refinery in Baytown, Texas.
Jessica Rinaldi | Reuters
The showdown between Exxon Mobil and a tiny activist fund to determine the oil giant’s board and future direction was too brief to call early Wednesday, according to those familiar with the matter.
The 12 Exxon directors will be up for election on Wednesday in the first major boardroom competition with climate change a central theme.
Exxon has long struggled to keep climate activists at bay, negotiate with large corporations to provide details on its emissions, and publicly support carbon reduction. This year it has greatly increased spending on showcasing its case and added a director from an ESG activist fund.
BlackRock, Exxon’s second largest shareholder, smacked those efforts by winning three nominees from the Engine No. 1 that promotes sustainable investment.
The viability of Exxon’s climate strategy and past resistance to shareholder concerns lagged BlackRock’s vote, according to people familiar with the decision.
The preliminary voting results are expected by noon. The results will show whether energy investors will find broad support for a transition to cleaner fuels. Never before have climate concerns become so important for the director’s competition of a large oil company, according to proxy experts.
“The world around them is changing,” said Aeisha Mastagni, portfolio manager at the California State Teachers’ Retirement System, who supported the activists. The proxy fight has achieved “monumental” importance, she said.
Exxon can expect strong support from retirees and smaller investors who count on the company’s rich dividend. Proxy battles are notoriously difficult for challengers, said a hedge fund manager outside of Exxon.
“We have one of the strongest bodies in America,” said Chief Executive Darren Woods in an interview last week. His board of directors understands the complexities of the company and supports a way to reduce CO2 emissions under the Paris Agreement, he said.
Still, new directors can help as the industry assesses the future of fossil fuels and Exxon. There won’t be a need for new oil and gas projects if investors want Netzero carbon emissions by 2050, the group of oil-consuming nations said this month.
Wednesday’s vote “is a good example of activists’ responsibility to help the company find the board it needs to drive the energy transition,” said Robert Eccles, professor at Oxford University’s Saïd Business School.