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Green activist investors score third seat on Exxon’s 12-member board

Green activists win THIRD seat on Exxon’s 12-member board and will now try to force oil giant to reduce emissions and overhaul pay

  • Activist hedge fund Engine No. 1 appeared to secure a third seat on the fossil fuel giant’s board of directors, the company announced Wednesday 
  • Alexander Karsner, a senior Google strategist, joins environmental scientist Kaisa Hietala and former Andeavor CEO Gregory Goff on the 12-person board
  • Chief among Engine No. 1’s goals is a greater investment in clean energy
  • The success was part of a rise in investor concerns on environmental, social and governance issues 

Exxon shareholders have elected a third director nominated by activist hedge fund Engine No. 1 to the energy company’s board, extending the investment firm’s upset victory at the top American energy corporation. 

Alexander Karsner, a strategist at Google-owned Alphabet Inc, joined fellow Engine No. 1 nominees Gregory Goff, a former chief executive officer at petroleum refining company Andeavor, and environmental scientist Kaisa Hietala on Exxon’s 12-member board of directors. 

Chief among the firm’s objectives are greater investments in clean energy to better reach emission reduction goals as well as an overhaul of management compensation incentives. 

The victory was the result of a month’s-long campaign to sway major holders and its success is part of a ‘tidal wave’ of investor concerns on environmental, social and corporate governance issues, said Exxon Director Ursula Burns, who spoke Wednesday evening at a Federal Reserve Bank of Dallas virtual event.

Activist investor hedge fund Engine No. 1 scored another victory Wednesday when shareholders elected Alexander Karsner, a strategist at Google-owned Alphabet Inc. to Exxon’s 12-member board of directors  

Gregory Goff

Kaisa Hietala

The win comes after Engine No. 1  succeeded in electing Gregory Goff (left) and Kaisa Hietala (right) to the Exxon board last Wendesday following a pitched battle with other shareholders

The company’s response to environmental criticisms ‘has not been well done,’ Burns said, adding: ‘that’s one of the thing we have to work on,’ noting its investments in carbon capture and storage technologies. Burns was one of the directors who secured a seat last week.

‘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,’ said Exxon Chief Executive Darren Woods in a statement.  

Woods, who campaigned against the challenger, was re-elected by 94.1%, a larger margin than a year ago. A non-binding shareholder proposal asking the company to split the CEO and chairman’s roles was supported by 22.1% compared to 32.7% last year, according to preliminary numbers released on Wednesday. 

The three new board members face an insular corporate culture renowned for slow-to-change ways. Karnser, Goff and Hietala will be three voices among a 12-person board that has had six directors handpicked by Woods. 

The wins by Engine No. 1’s slate mean that directors Steven Kandarian, Samuel Palmisano and Wan Zulkiflee will exit the board, the company said. Former Malaysian state oil company chief Zulkiflee was appointed in February after Exxon received blunt criticism its directors lacked energy experience. Former IBM CEO Palmisano was the board’s longest serving director with 15 years.   

The two new board members face an insular corporate culture renowned for slow-to-change ways. Above, ExxoxMobil's Baton Rouge refinery in Louisiana

The two new board members face an insular corporate culture renowned for slow-to-change ways. Above, ExxoxMobil’s Baton Rouge refinery in Louisiana

Engine No. 1’s fourth nominee, Anders Runevad, former chief executive officer of Vestas Wind Systems, did not appear to garner enough votes to sit on the board. 

The tallies remain preliminary as the counting continues a week after Exxon’s annual meeting, where the company delayed proceedings by taking a recess, a move criticized by Engine No. 1 as a pretext to continue to solicit votes.

Exxon’s stock was up .79% at the closing bell Wendnesday.  

Despite the victories, some warned that any major changes might not come for some time.

‘People who are expecting substantive changes soon at (Exxon) will likely be sorely disappointed,’ said Mark Stoeckle, senior portfolio manager at Adams Funds. ‘Repositioning XOM from a company focused on oil to one focused on climate change issues will take a long, long time.’ 

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