Exxon Mobil Challenged by Activist Investors at Its Shareholder Meeting (nytimes.com) 56
The New York Times notes that "record numbers of shareholder votes" are "pressing major, publicly traded petroleum companies to prepare for a zero-carbon world." And then they tell the story of two activist investors who attempted to pack Exxon Mobil's board of directors with a slate of climate-friendly nominees at its annual shareholder's meeting:
It had been a bruising year for the industry, with oil prices trading negative last spring and record numbers of shareholder votes pressing major, publicly traded petroleum companies to prepare for a zero-carbon world. Just that morning, as the meeting was starting, the news broke that a Dutch court had declared that Shell must accelerate its emissions-reduction efforts. As Exxon Mobil's meeting was underway, so was Chevron's, and shareholders there voted in favor of a proposal to reduce the emissions generated by the company's product, which would call for a re-evaluation of the core business...
[T]he core of [activist investor Charlie Penner's] argument rested on mobilizing shareholders with classic activist tactics: focusing on the company's financials, underscoring its flagging profitability and setting out an argument for how to raise the value of the company's stock by making smarter expenditures. He didn't aim to undercut the core business necessarily; rather than urging Exxon Mobil to give up all oil and gas, he wanted the company to practice what finance people like to call "capital discipline," which basically just means not spending prodigiously. He also reasoned that, given mounting pressure from society and governments to decarbonize the global economy, it would be strategically smarter for Exxon Mobil to be part of an energy transition, rather than letting itself be outstripped by other companies innovating to meet demand for low-carbon power...
With plans to increase oil-and-gas production by 25 percent over the next five years, the company seemed out of step with the market. Profitability had already been slipping for a decade. Exxon Mobil earned the largest annual profit in U.S. history in 2008 and nearly eclipsed that record in 2012; last year it lost $22 billion. In part, the loss was due to a historic $19 billion write-down on the value of its assets. That assessment may still be too rosy; a whistle-blower reportedly told the Securities Exchange Commission in January that Exxon Mobil had overvalued its assets by at least $56 billion, in part by pressuring employees to inflate expectations about the drilling timelines in the Permian Basin in Texas and New Mexico, which remains the company's U.S. cash cow. (Exxon Mobil called the claims "demonstrably false....") Penner already sensed that Exxon Mobil was an industry outlier, more reluctant than others to recognize that if the world enacted the emissions reductions that its governments had committed to, there would be no viable business for a publicly traded oil company in 30 years...
[Exxon Mobile] spent more than $35 million blanketing shareholders with appeals to reject the activists and stick with management... Just days before the proxy votes would be tallied, Exxon Mobil announced that it would add two more yet-unnamed directors, one with "climate experience" and one with experience in the energy industry. But the company's efforts at placating the activists fell short, and a week after the annual meeting, it became clear by how much; the company announced that Andy Karsner, the energy entrepreneur, had also been elected to the board, giving Engine No. 1's candidates a quarter of the seats.
The small activist hedge fund Engine No. 1 holds just 0.02 percent of ExxonMobil's stock, points out the Washington Post, "but marshaled commanding support from investment managers, pensions funds and individual shareholders."
The Times called their victory "shocking," and dubbed them "the little hedge fund taking down big oil."
It had been a bruising year for the industry, with oil prices trading negative last spring and record numbers of shareholder votes pressing major, publicly traded petroleum companies to prepare for a zero-carbon world. Just that morning, as the meeting was starting, the news broke that a Dutch court had declared that Shell must accelerate its emissions-reduction efforts. As Exxon Mobil's meeting was underway, so was Chevron's, and shareholders there voted in favor of a proposal to reduce the emissions generated by the company's product, which would call for a re-evaluation of the core business...
[T]he core of [activist investor Charlie Penner's] argument rested on mobilizing shareholders with classic activist tactics: focusing on the company's financials, underscoring its flagging profitability and setting out an argument for how to raise the value of the company's stock by making smarter expenditures. He didn't aim to undercut the core business necessarily; rather than urging Exxon Mobil to give up all oil and gas, he wanted the company to practice what finance people like to call "capital discipline," which basically just means not spending prodigiously. He also reasoned that, given mounting pressure from society and governments to decarbonize the global economy, it would be strategically smarter for Exxon Mobil to be part of an energy transition, rather than letting itself be outstripped by other companies innovating to meet demand for low-carbon power...
With plans to increase oil-and-gas production by 25 percent over the next five years, the company seemed out of step with the market. Profitability had already been slipping for a decade. Exxon Mobil earned the largest annual profit in U.S. history in 2008 and nearly eclipsed that record in 2012; last year it lost $22 billion. In part, the loss was due to a historic $19 billion write-down on the value of its assets. That assessment may still be too rosy; a whistle-blower reportedly told the Securities Exchange Commission in January that Exxon Mobil had overvalued its assets by at least $56 billion, in part by pressuring employees to inflate expectations about the drilling timelines in the Permian Basin in Texas and New Mexico, which remains the company's U.S. cash cow. (Exxon Mobil called the claims "demonstrably false....") Penner already sensed that Exxon Mobil was an industry outlier, more reluctant than others to recognize that if the world enacted the emissions reductions that its governments had committed to, there would be no viable business for a publicly traded oil company in 30 years...
[Exxon Mobile] spent more than $35 million blanketing shareholders with appeals to reject the activists and stick with management... Just days before the proxy votes would be tallied, Exxon Mobil announced that it would add two more yet-unnamed directors, one with "climate experience" and one with experience in the energy industry. But the company's efforts at placating the activists fell short, and a week after the annual meeting, it became clear by how much; the company announced that Andy Karsner, the energy entrepreneur, had also been elected to the board, giving Engine No. 1's candidates a quarter of the seats.
The small activist hedge fund Engine No. 1 holds just 0.02 percent of ExxonMobil's stock, points out the Washington Post, "but marshaled commanding support from investment managers, pensions funds and individual shareholders."
The Times called their victory "shocking," and dubbed them "the little hedge fund taking down big oil."
(((New York Times))) Propaganda Front (Score:1, Insightful)
sensationalist nonsense (Score:3)
a "record number"? still tiny.
over 80 of our energy comes from fossil fuel, for next decade there will be profit and growth for Exxon and companies like it. That's reality, hype and hooey mean nothing.
Re: (Score:2, Troll)
over 80 of our energy comes from fossil fuel, for next decade there will be profit and growth for Exxon and companies like it. That's reality, hype and hooey mean nothing.
And at the rate renewables are growing (because they are now cheaper AND better), that number will be 20% within the next 15 years. Fossil fuels are headed the way the of dodo bird. Pun intended.
Re: (Score:3, Interesting)
[earlier poster] thinks that everything scales linearly. [I don't understand]
Renewable energy is growing nothing like linearly. The growth worldwide is more or less exponential [ourworldindata.org] and that more than explains the grandparent's claims. The reason for this is the technology learning curve for renewable energy [wikipedia.org]. Since both solar and wind generation are essentially new technologies on a learning curve they are continually getting better.
As the renewable technologies get better, they get more profitable, they get installed more and there is more chance for learning. As we learn more we m
Re: (Score:3, Informative)
nonsense, fossil fuel use is projected to grow too. It's 84 percent of global supply now but will outpace "renewable"
Smarter countries are going to nuclear and no their cost is not $150 per MWH, is much much lower. Stop cherry picking your data from stupid country.
Re: (Score:2)
nonsense, fossil fuel use is projected to grow too.
I note you don't link to your sources or even anywhere like Wikipedia which links to it's sources and could show you . I wonder why that could be? I hereby predict that Tulips are the future energy source. By 2050 95% of energy will come from Tulips. Buy Tulip bulbs now.
(and no, the fact that when the pandemic ends, fossil fuels will get back part of their previous losses won't prove that I'm wrong)
Re: (Score:2)
So you like to cherry pick greenie bullshit that affirms your misconceptions. Meanwhile, realists are saying fossil fuel use will grow for a while.
"Aggregate fossil fuel demand is set to peak in 2027 â" with oil peaking in 2029 and gas in 2037 â" partially due to the impacts of COVID-19, according to new research by McKinsey & Company. "
https://energydigital.com/oil-... [energydigital.com]
https://www.realclearenergy.or... [realclearenergy.org]
Re: (Score:2)
more fun, by 2040 renewables will be meeting 8% of global demand, that's cute but a drop in the bucket too. It's be fossil fuel for a long time.
https://www.capp.ca/energy/wor... [www.capp.ca]
Regarding your moronic comment (Score:2)
Stop cherry picking your data from stupid country.
Wikipedia is cherry picking?
I think you are confusing your booger picking with cherry picking informational sources.
Re: (Score:2)
you are blathering about USA issues
there is a whole world out there doing nuclear power that isn't USA.
Re: (Score:2)
Re: (Score:2)
why don't you read some facts about big players, like China having 1/3 the cost of nuclear power than EU
USA and France and others had massive cost overruns.
https://www.sciencedirect.com/... [sciencedirect.com]
Re: (Score:2)
over 80 of our energy comes from fossil fuel, for next decade there will be profit and growth for Exxon and companies like it. That's reality, hype and hooey mean nothing.
And at the rate renewables are growing (because they are now cheaper AND better), that number will be 20% within the next 15 years. Fossil fuels are headed the way the of dodo bird. Pun intended.
Probably not the way of the dodo, there is still a large market for blacktop, lubricants and plastics that will probably never go away.
Now as far as electric cars, yeah sure they'll be taking away a lot of oil production for gasoline, and maybe diesel, so overall a smaller market, but it probably won't be going away.
Re: (Score:2)
Probably not the way of the dodo, there is still a large market for blacktop, lubricants and plastics that will probably never go away.
Now as far as electric cars, yeah sure they'll be taking away a lot of oil production for gasoline, and maybe diesel, so overall a smaller market, but it probably won't be going away.
I get that oil production will be around afterward. @iggymanz said 80% of FUEL. That's what we're debating. And there really is no debate whether this will happen. The plans are already in place and working.
Re: (Score:2)
I was saying 84 of all global energy comes from fossil fuel, that is projected to grow and will. Your electric cars are powered two-thirds by fossil fuel globally too.
I personally would rather we use massive solar collection fields and UHVDC wires to make and move energy, but that day is not today and not the near future. Reality bites.
Re: (Score:2)
Re: (Score:2, Troll)
False, fossil fuel is 84 percent of global energy supply and projected to *grow*. Your "renewables" won't matter, they're gnat farts in a hurricane.
Re: (Score:3)
That would be you, not liking my facts, fake news boy.
I don't claim to like the truth, but truth it is.
Re: (Score:2)
Re: (Score:3)
over 80% of our energy comes from fossil fuel, for next decade there will be profit and growth for Exxon and companies like it.
Actually... that number is slipping. [eia.gov] It may still be 79% but wind power is starting to take progressively larger bites out of the energy production cake and there are offshore wind farms projects on the horizon. From a risk management point of view, it would be wise to diversify their investments because it's easier to scale up something you are already producing than find yourself suddenly missing out and have to catch up to everyone else.
You have also presumed that nothing is going to change with laws a
Re: (Score:1)
No you've linked U.S.-only data. The global percent is 84, and that projected to rise in next two years at least.
Re: (Score:2)
No you've linked U.S.-only data. The global percent is 84, and that projected to rise in next two years at least.
The next two years are recovery from the pandemic crash. Obviously that will be a return to old systems that were put out of use. This is hardly a useful trend and is exactly the accounting trick I guessed above that you were using.
Re: (Score:1)
exxon conversion to renewable energy (Score:2)
interesting.
how much is preferred voting stock and its stock symbol
The Eastman Kodak of the 21st Century (Score:1)
If they don't get their act together
"Activist Investor" violating fiduciary maxprofit (Score:1)
When is the SEC or a company going to hit back these terrorists who are violating the requirement to maximize profit for the owners -- who are the millions of shareholders, including retirement funds and many many small wage earners?
Conspiracy to defraud investors is terrorism.
Many well meaning organizations have become extremist and corrupted by being taken over by NIMBY 'everyone else is not just wrong but evil bullies'. If you want to create a better alternative go do it. Destroying an existing company
Re: (Score:1)
They are not going to because there *is no such requirement in the law*. Quit lying, ya trolling cunt.
Penner is not wrong (Score:4, Interesting)
I read this pressure on deep pockets companies (not just energy companies like Exxon but Apple and Google) as the exit strategy of VC funds to get out of their green energy bets. Much like profitless s/w firms just tried to hang on until Microsoft bought them out.
Re: (Score:3, Insightful)
You are assuming that Exxon has nothing to offer renewables. If exxon took all the money it invests in exploration today and invested it in developing plants which could generate liquid hydrocarbons from water and air on a large scale in an economic way then perhaps their investment in energy logistics would be salvageable.
If Exxon had invested in hydrogen 20 years ago, before batteries became competitive with hydrocarbons for transport, perhaps they could have saved much of their company and created a hyd
Re: (Score:2)
created a hydrogen economy
Top down thinking. Typical of centrally planned economies [wikipedia.org]. Tesla succeed because Elon Must didn't have to wait for an electricity economy.
Re: (Score:3)
created a hydrogen economy
Top down thinking. Typical of centrally planned economies [wikipedia.org]. Tesla succeed because Elon Must didn't have to wait for an electricity economy.
Planned economies don't fail because their ideas are stupid. They fail because the implementation is awful and under motivated and because they aren't flexible in dealing with change.
Look at the mobile internet, and see how specific parallel top down planning with competing companies each pushing their own vision ended up completely beating distributed ideas like WiFi. Hundreds of billions of dollars (if not hundreds) were spent on building a network worldwide which means you can take a phone from Austral
Re: (Score:2)
specific parallel top down planning
Because it is practically impossible to pick a winner in any market. Search for 'Solyndra Syndrome'. Everyone bets on their own solution and the customers pick the winner(s).
which means you can take a phone from Australia, turn it on in Norway and use it all the way as you drive to Italy via Estonia
But not the USA. I'm due to lose my 3G 4 band GSM phone soon. When I go into the phone store, I ask for the equivalent of a 5G 'world phone'. And all I hear is the sound of crickets. I'm not even certain that US phones won't suffer from the same technology split that Verizon vs AT&T/Sprint phones do.
Re: (Score:2)
If I want to put my money into solar or wind then I should be going long on solar or wind companies. If I'm interested in oil, then Exxon should stand as a pure oil investment.
Maybe give them a call, tell them you're not buying their shares them if they let any solar or wind stuff into their operations.
Honestly, what company gives a fuck whether some investors like them being undiversified?
Re: (Score:2)
If I want to put my money into solar or wind then I should be going long on solar or wind companies. If I'm interested in oil, then Exxon should stand as a pure oil investment.
What if you want to back green energy but are looking for a large operating company with immense engineering expertise and really REALLY deep pockets and a long history of project delivery while at the same time having a history of really great dividends?
That would seem the most sensible of investments, and convincing an oil company to save themselves and diversify their business ends up being a win-win for everyone.
Re: (Score:1)
If I'm interested in oil, then Exxon should stand as a pure oil investment.
What you think "should" happen will ultimately leave you disappointed. Apple didn't just stop at being a PC company. Nintendo didn't just stay a cards & toys company (and they went public before the NES). Berkshire Hathaway didn't just stay in textiles.
It was bound to happen with the oil&gas companies. I've been anticipating it for quite some time now, because what are oil companies supposed to do as public sentiment changes, just die politely with increasing government restrictions placed upon them
Re: Penner is not wrong (Score:2)
It IS happening at the shareholder level. The owners want to reduce reliance on fossil fuels. They're the owners. They can do what they want. What kind of system do you propose to restrict company owners from deciding what business they want to be in?
And Aramco rejoices (Score:2)
Oils gonna come from somewhere.
Wishy washy (Score:2)
.02 percent of the shares getting a quarter of the seats? Apparently sometimes the progressives don't like solely popular representation after all.
Re: (Score:2)
.02 percent of the shares getting a quarter of the seats? Apparently sometimes the progressives don't like solely popular representation after all.
And apparently you missed the part of TFS that says they "marshaled commanding support from investment managers, pensions funds and individual shareholders."
In other words, they may only own a small fraction of the company, but they got lots and lots of shareholders on board with their plan. What part of that is not "popular representation?"
Re: (Score:2)
Perhaps, depending on the details of just how they "marshaled" that support. Though I guess fear of non-conformity applies in voting as well (on both sides).
BTW: Advanced Slashdot readers don't even read the summary.
Don't be fooled... (Score:2)
Re: (Score:2)
Or, not buy oil, then they go bankrupt.
It's simple but not easy.
How hard can it be ... (Score:1)
to understand that a reduction of CO2 emissions *implies* a reduction of fossil fuel extraction by the same amount, possibly helped by a significant effort in negative emissions (NETs)? We don't have the necessary NETs (yet!), so emissions have to be reduced, therefore production. It's really that simple.
So who the hell those misguided crooks at the helm of Exxon think they are planning to *increase* production while a reduction is urgently needed?!!!
The first verdict was just recently pronounced against [dw.com]
Re: (Score:3)
So who the hell those misguided crooks at the helm of Exxon think they are planning to *increase* production while a reduction is urgently needed?!!!
They are planning to increase production in oil because people like you are planning to buy oil.
It really comes down to whether we can build a practical electric car or not. As soon as we can do that, people will stop buying oil.
Practical electric cars are coming, the technology is improving, but right now electric cars are still slightly in the luxury category.
Plastic, lubricants, wax, and petro chemicals (Score:3, Informative)
The nEw YoRk TiMeS⦠(Score:1)