Energy giant Exxon Mobil Corp (NYSE: XOM) has revealed in its SEC filing that Engine No. 1, a hedge fund, has succeeded in grabbing the third seat on its board of directors. Interestingly, Engine No. 1, a relatively small shareholder of Exxon, stunned Exxon with its victory through propaganda focused on environmental issues.
The stock of Exxon Mobile closed Thursday’s trading at $61.18, up $0.24 or 0.39% from the previous close.
The SEC filing, which is based on initial voting results, has come soon after the activist company garnered two seats in the Irving, Texas-based oil company’s board during the annual shareholder meeting conducted on May 26th. At that time, the votes for the third seat were a neck-and-neck race.
Interestingly, Engine No.1 holds only 0.02% shares of Exxon. Still, the activist firm was hitting hard on Exxon since December, forcing it to reevaluate its operations in a world moving towards zero-carbon systems. Engine No. 1 has been aiming at the oil giant’s dependence on fossil fuels.
The voting in favor of Engine No.1 has happened after several months of backlash between the environment activist firm and Exxon, with the former nominating four independent applicants for the board of directors.
Notably, Engine No.1 received the backing of the New York State Common Retirement Fund, CalPERS, CalSTRS, and several additional pension funds. As the casting of votes did not complete, the aforesaid shareholder meeting continued for several hours and took place in the form of two sessions with about a one-hour break in between.
Commenting on the victory of three independent candidates nominated by Engine No.1, Darren Woods, Chairman and CEO of Exxon, said that the company would cooperate with all the directors to move forward on the advancement made to increase the value of long-term shareholders and attain the objective of a “lower-carbon future.”
Exxon management, on its part, has stressed the initiatives being taken for cementing its position in a greener future. This includes setting aside $3 billion for research related to carbon capture and other emission reduction technologies.
The victory of Engine No.1’s candidates clearly reflects the mindset of shareholders who are closely watching Exxon’s position in a world moving away from a non-renewable source of energy (fossil fuels).
Even though Exxon’s stock has gained 50% in the year-to-date, it lags the long-term gains of the broader market. Engine No. 1 has pointed out that Exxon’s eventual financial steadiness is dependent on diversifying its business operations.
Commenting on the victory, Engine No. 1 said that it is thankful to shareholders for voting in favor of its candidates and affirmed that the selected independent board members would proactively work towards increasing the value of Exxon Mobile shareholders in the long term.
The news of the activist firm winning three seats on Exxon’s board is expected to keep the stock range-bound with a slight bearish bias.
The stock is facing heavy resistance at 62. The next support is anticipated only near 60. Additionally, the stock has also closed below its 50-day moving average. Therefore, we are anticipating the stock to decline slightly in the days ahead.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
