Activist investor Engine No. 1 has warned Exxon Mobil shareholders the company faces an “existential” business risk as governments vow to slash emissions, while the company doubled down on its decisions Monday.
The two parties are involved in a bitter proxy contest that is set to climax in a month, with Engine No. 1 seeking four board seats.
The activist hedge fund believes Exxon has not invested sufficiently in low carbon energy sources and has a board that may miss the tough decisions needed to deal with a coming energy transition. On Monday, it warned in an 80-page investor presentation that, “ExxonMobil still has no credible plan to protect in an energy transition.”
The hedge fund also said that the supermajor has “refused” to accept fossil fuel demand may decline and that the company has “destroyed value.”
In a similarly lengthy deck, Exxon said Engine No.1 had declined multiple attempts to resolve the campaign amicably, contrasting the behavior with a handshake agreement Exxon reached with D.E. Shaw Group, and said Engine No.1 had not offered up a plan to create value. The activist says that will be the job of a reconstituted board.
While the company insisted it was aligned with goals outlined in the Paris Agreement, had integrated ESG metrics in executive compensation, and would burnish its green credentials by utilizing its carbon capture technology, it made no apologies for its “counter-cyclical” investments in oil and natural gas.
The two sides have drawn up battle lines over the measurement of the stock’s performance, Exxon displaying total shareholder return until April 15, while Engine No.1 has claimed credit for outperformance after it initiated the contest.
The contest, one of the most expensive ever with a combined budget of nearly $100 million, goes to a vote on May 26.