America’s 3 largest pension funds challenge Exxon Mobil board of directors

The three largest US pension funds are backing an offer by hedge fund firm Engine No. 1 to replace the directors of Exxon Mobil.

The $ 460.8 billion California Public Employees Retirement System in Sacramento, The $ 291.7 billion California State Teachers Retirement System in West Sacramento, and the $ 247.7 billion New York State Pooled Pension Fund in Albany are joining the new hedge fund firm in challenging the slate. of Exxon Mobil-backed directors who will stand for election at the energy company’s annual meeting on May 26.

Shareholders are questioning whether directors have enough energy industry experience to help the company prepare for “value-creating and transformative change in the energy industry,” said Engine n ° 1 in a press release. Eleven of the twelve directors proposed by the company are independent.

CalPERS chief investment officer and head of corporate governance Simiso Nzima said the pension fund supports board changes due to long-term financial underperformance and the need for greater depth of skills and experience to tackle the significant challenges facing the business. “In order to effectively oversee the transition to a low carbon economy, we believe the board would benefit from additional expertise both in its core business and in renewable energy technologies,” he said. -he declares.

A spokesperson for CalSTRS said in an emailed statement: “We are delighted to see growing support for the No.1 engine candidates for the Exxon Mobil board of directors. These candidates have the skills and experience necessary to increase long-term shareholder value and guide Exxon Mobil in the global energy transition.

In its own proxy materials promoting four other directors, Engine No. 1 said that “ExxonMobil’s iconic status is eroding in the face of declining yields, high debt levels and financial losses. questions about its ability to sustain its dividend. We believe that the repositioning of ExxonMobil for the long haul Long-term value creation will require an understanding of the trends shaping the future of energy and the opportunities they create, but none independent members of the board of directors have no other experience in the energy sector.

New York State Comptroller Thomas P. DiNapoli, sole trustee of the pension fund, said in his voting position that “Exxon’s board of directors needs an overhaul. We continue to do this. be deeply concerned about Exxon’s failure to manage climate risk and its refusal to heed calls to transition to a low-carbon future. … We support the No.1 engine candidate list because they bring a transformative industry experience to the table and hope it’s not too late to turn the tide at Exxon and improve its performance. “

Exxon Mobil issued a letter to shareholders on Monday affirming the commitment of the board of directors and management team “to pursue the right technology-driven strategy to successfully transition to a low-carbon energy future,” while the “month-old hedge fund, Engine No. 1, wants your company to pursue a vague and undefined plan – which we believe will put our future and your dividend at risk. “

In a March 16 proxy statement urging shareholders to elect the company’s roster of directors, Exxon Mobil chairman and CEO Darren Woods said the board had recruited directors in recent years. with in-depth expertise in the areas of climate change, financial markets, capital allocation, energy transition and the environment, social and governance practices, and that its investments in low-carbon technologies commercially attractive “will be an integral part of our long-term strategy”.