ExxonMobil faces an investor revolt at
its annual meeting this month after
proxy adviser Institutional Shareholder Services recommended voting
for three of four new board members
nominated by an activist hedge fund,
piling pressure on chief executive Darren Woods.
The fund, Engine No 1, has called for a
board overhaul and sweeping changes
to Exxon’s strategy on climate, capital
allocation and executive pay.
The vote on May 26 is shaping up to be
one the biggest proxy contests in US corporate history and will reveal the extent
of investor concern about climate risks
facing fossil fuel producers.
ISS’s advice, circulated to shareholders yesterday, said Engine No 1 had
“made a compelling case for change”
and suggested Exxon’s strategy
remained too reliant on rosy assumptions about future oil consumption.
Exxon’s “energy transition strategy
appears to rely heavily on carbon capture, which will likely require government support to be viable”, it said.
Engine No 1 said the ISS recommendation was “further validation of our
belief that addressing the fundamental
issues at ExxonMobil requires a board
that includes individuals with relevant
energy industry experience and skills”.
The ISS statement puts significant
momentum behind the fund’s fivemonth-long proxy campaign.
On Wednesday, UK-based Pensions &
Investment Research Consultants,
another proxy adviser, backed the
fund’s four board nominees and recommended voting against five Exxon board
members, including Woods. Glass
Lewis, another shareholder adviser, has
yet to make its recommendation.
Calstrs, Calpers, and New York State
Common Retirement Fund — the three
biggest US pension funds — and asset
manager Legal & General Investment
Management, another Exxon shareholder, have all said they will vote for
Engine No 1’s slate.
Exxon’s three biggest shareholders,
BlackRock, State Street and Vanguard,
have not revealed their voting intentions. In January, BlackRock chief Larry
Fink made climate change risks a central theme of his annual letter to CEOs.
Exxon stock has outperformed rivals
this year and is up almost 50 per cent