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Exxon Mobil Activists Push for Climate-Focused Changes to Board, Future

Exxon Mobil CEO Darren Woods faces the sternest test of his four-year term as activists push for climate-focused changes to the oil major's board of directors.

Exxon Mobil  (XOM)  traded higher Wednesday ahead of a key shareholder vote on board seats that could mark the most significant change in decades for the country's biggest oil company as well as the future of CEO Darren Woods. 

Exxon Mobil will seek the election of all twelve members of its corporate board at Wednesday's annual meeting in New York, with activist hedge fund Engine No. 1 pushing for the addition of three senior executives -- Gregory Goff, Kaisa Hietala, Anders Runevad and Alexander Karsner -- its says will help accelerate the group's transition to lower-carbon strategies.

Engine No. 1,  a San Francisco-based hedge fund that owns only 0.2% of Exxon shares, has managed to corral support from major investors such as BlackRock and the California Public Employees' Retirement System (CalPERS) in its effort to pressure  Woods to change course following the oil major's first annual loss as a public company last year. 

Woods, however, has said the activists' campaign would "undermine" the group's plans and "put the company's future, and its dividend, in jeopardy."

"We have one of the strongest boards in corporate America, and we feel very strongly that the board will drive success in today's environment and position the company for success as the industry transitions," Woods said in an emailed statement to TheStreet. "The first quarter results are indicative of the work we've been engaged in since 2017 to reshape the business."

“We’ve agreed with the Paris Agreement since its inception, we’ve reduced our emissions, and we’ve been working for decades on technologies required to help society achieve its lower carbon vision."

Exxon Mobil shares were marked 0.5% higher in pre-market trading Wednesday to indicate an opening bell price of $58.56 each, a move that extends the stock's year-to-date gain to around 42%.

Shareholder proxy firms Institutional Shareholder Services and Glass Lewis have recommended supporting the Engine No. 1 board appointees, while Exxon has attempted to win over shareholders with the addition of DE Shaw-backed board members Jeff Ubben and former Comcast CFO Mike Angelakis.

Exxon said in late April that there is "growing public and private sector support for carbon capture as a critical enabling technology to reduce emissions and help meet society's net-zero ambitions” after it posted stronger-than-expected first quarter earnings of 64 cents a share and $59.15 billion in overall revenues.

"We also made progress on our energy transition strategy by launching our new ExxonMobil Low Carbon Solutions business, which is initially working to develop innovative, large-scale carbon capture and storage (CCS) concepts, including the evaluation and advancement of more than 20 new opportunities, such as a multi-industry hub to reduce emissions from hard-to-decarbonize industries near the Houston Ship Channel," Woods said.