Oil giant remains well-positioned for continued value destruction for decades to come -Shareholders

Feb 04, 2021 News

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ExxonMobil’s 4th Quarter Earnings Call…

Kaieteur News – Following ExxonMobil Corporation’s announcement on Tuesday, that it suffered a US$20B loss during the fourth quarter of 2020 along with revelations that it has launched a new company to spearhead its solutions on emissions reductions, unimpressed shareholders were quick to register their frustration and discontent.
Specifically, making its dissatisfaction known was Engine No. 1, a new investment firm that seeks to enhance long-term value through active ownership and which will soon be nominating four highly qualified, independent director candidates to the ExxonMobil Board of Directors.
In a statement to the press, Engine No. 1 said that a Board that has underperformed this dramatically and defied shareholder sentiment for this long has not earned the right to choose its own new in the face of calls for change. The investment firm went further to state that ExxonMobil shareholders deserve a Board that works proactively to create long-term value, not defensively in the face of deteriorating returns and the threat of losing its seats.
Further, the investment firm said that Tuesday’s patchwork of announcements do not materially alter ExxonMobil’s long-term trajectory nor do they position it to succeed in a changing world. In fact, Engine No. 1 said, “For years ExxonMobil has pursued spending and strategic plans that position it to succeed only in the absence of a material long-term energy demand shift, and it remains positioned for continued value destruction for decades to come under alternate scenarios.”
It added, “It is equally poor long-term planning to rely almost exclusively on the idea that carbon capture will become scalable and affordable soon enough to allow for continued oil and gas production growth for decades to come under a Paris-compliant trajectory.”
Taking the foregoing into account, Engine No.1 said it has nominated four independent individuals who each bring a strong track record of transformative success in energy as well as their own unique set of skills and experiences that are directly relevant to the present and future of ExxonMobil.
“We believe these nominees can bring real change – versus the appearance of change – and position ExxonMobil to successfully evolve along with the rapidly-changing energy industry. We look forward to continuing to make the case for reenergizing ExxonMobil,” the investment firm said.
The nominees being proposed by Engine One are Gregory J. Goff, Kaisa Hietala, Alexander Karsner, and Anders Runevad.
This newspaper had previously reported that Goff has a long track record of success in the energy industry. He served as the CEO of Andeavor (ANDV), a leading petroleum refining and marketing company formerly known as Tesoro, for eight years ending in 2018. He was named one of the “Best-Performing CEOs in the World” by Harvard Business Review in 2018.
With regard to Ms. Hietala, Engine One was keen to note that she is an experienced leader in strategic transformation in the energy sector who began her career in oil and gas exploration and crude oil trading. She played a central role in the strategic transformation of Neste into the world’s largest and most profitable producer of renewable diesel and jet fuel, which was named by Harvard Business Review as one of the “Top 20 Business Transformations of the Last Decade” in 2019.
Mr. Karsner is also an accomplished energy industry entrepreneur and policymaker with more than three decades of global conventional and renewable energy experience. According to Engine One, he began his career developing and financing large-scale energy infrastructure, and as a private equity investor, venture partner, and advisor, his portfolios have included some of the most successful clean-tech startups of the past decade.
As for Mr. Runevad, Kaieteur News understands that he is a successful business leader with global energy experience and was a signatory of the United Nations Paris Climate Agreement. He served as the CEO of Vestas Wind Systems, a wind turbine manufacturing, installation, and servicing company with more installed wind power worldwide than any other manufacturer, for six years ending in 2019, and is credited with turning around the company. He had appeared on Fortune’s “Businessperson of the Year” list in 2016 and was named one of the “Best-Performing CEOs in the World” by Harvard Business Review in 2016, 2017, and 2019.
Since learning of Engine One’s intention to grab four Board seats, ExxonMobil responded stating that the notice of nomination would be evaluated in line with the corporation’s by-laws.
ExxonMobil said too that it will continue to update shareholders in the coming weeks on the company’s strategy to build long-term, sustainable value for shareholders. This newspaper understands that it will also provide updates on company performance and actions to address climate change, including initiatives to commercialize technologies, which are key to reducing emissions and meeting societal goals consistent with the Paris Agreement.

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