BlackRock, the second largest shareholder of Exxon Mobil Corp (XOM.N), is backing several candidates from hedge fund Engine No. 1 to join the company’s board of directors, a blow to the energy giant, according to reports. people familiar with the matter.
With Wednesday’s annual shareholder meeting, Exxon scrambled to gain the support of major institutional investors for its directors. Its most difficult board battle in recent history comes as the company comes under fire for its reluctance to invest more in renewables and years of poor financial performance.
BlackRock (BLK.N), the world’s largest fund manager, owns a 6.7% stake in Exxon, and its vote illustrates how frustrated shareholders are after years the company dismissed concerns about its strategy. Investors have gotten much more serious about tackling climate change.
BlackRock did not respond to a request for comment.
Exxon declined to comment until the results of the vote were released on Wednesday. Other sources told Reuters that the largest U.S. oil producer has called on its shareholders, including Vanguard and State Street, to garner support from its list of 12 directors.
Engine No. 1 only owns an estimated $ 50 million stake in Exxon, a company with a market capitalization of around $ 250 billion, but the hedge fund has publicly lobbied for Exxon to act faster to reduce its carbon footprint. The traction gained from shareholder advisory firms and BlackRock underscores the importance investors place on environmental, social and corporate governance (ESG) factors.
The sources requested anonymity because BlackRock does not publicly disclose how it conducts its vote in advance.
The final vote could turn on Exxon’s three biggest investors – Vanguard, State Street and BlackRock. Vanguard owns about 8.2% of Exxon’s shares while State Street owns 5.7%. Vanguard will not release its decision until the meeting, a spokesperson said on Tuesday.
BlackRock has been more willing than Vanguard and State Street to support dissident investors, analysts said. His decision could prove crucial to secure one or more seats for the No.1 engine nominees. Read More
Engine # 1 featured four directors – Gregory Goff, Kaisa Hietala, Alexander Karsner and Anders Runevad – with expertise in energy, technology and regulatory policy. BlackRock has backed everything but Runevad, the people said. Exxon said the four lacked the expertise needed for its board of directors.
BlackRock also extended an olive branch to management and voted for CEO Darren Woods and independent director Kenneth Frazier. Last year, BlackRock voted to split the roles of president and CEO that Woods occupies and voted against Frazier.
The California-based hedge fund has won backing from three big pension funds and other investors unhappy with Exxon’s efforts to craft a clean energy strategy. Exxon’s past rejection of governance and climate concerns has also cost its support, investors said.
Three proxy advisory firms that guide investor voting have backed the hedge fund’s list. Institutional Shareholder Services recommended three of the No.1 engine candidates while Glass Lewis backed two of the hedge fund candidates.
Exxon pledged Monday to add two new board members with energy and climate expertise within 12 months. Exxon’s share price has climbed 45% since the start of the year. Its stock was down 2% to $ 58.30 as of noon Tuesday.
Exxon’s returns have been lower than its global competitors, losing around 15% over the past five years.
The International Energy Agency (IEA) has said investors should stop funding new fossil fuel projects if they are to reduce greenhouse gas emissions by 2050. read more
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