Here comes the sun do, do, do

Here comes the sun

And I say it’s all right

The Beatles, 1969

The months before ExxonMobil’s May 26, 2021 Annual Shareholder Meeting were very exciting. There was the Magical Mystery Tour the company kindly put on for its investors. Not long after, we saw a Bad Moon Rising for the company. This was quickly followed by an adroit publication of the company inspired by Aesop’s Fables just before the meeting when the board and executive management began to wonder who’ll stop the rain.

Yet the company and its Chairman and CEO bravely rose to the occasion by putting on a brilliant and inspiring three-act play, “The Vote,” which was met with great critical acclaim by Shareholder Meeting Broadway Reviews. Director and lead actor Mr. Woods slyly ended the play on an inconclusive note, much to the consternation of its shareholders who were saying to themselves throughout the play:

Little darling, it’s been a long cold lonely winter (for shareholder returns)
Little darling, it seems like years since it’s (good governance) been here

But now we know the results of the rather extended voting for board directors and seven shareholder proposals, thanks to ExxonMobil’s June 2, 2021 filing of Form 8-K, and investors are saying: “Here comes the sun!” Although dawn is barely breaking, there are reasons to be hopeful that a 10-year long and cold lonely winter of deteriorating financial performance and dwindling industry significance is coming to an end.

Central to this optimism is that Engine No. 1 had three of the four proposed director nominees on its white card slate elected to the board: Kaisa Hietala, Gregory Goff, and Alexander Karsner. An excellent 75 percent success rate. In contrast, on the company’s blue card slate only nine of the 12 incumbents were elected, or two-thirds. Gone for sure are Samuel Palmisano, former Chairman and CEO of IBM, and the recently appointed (four months ago) Wan Zulkiflee, former President and Group CEO of the Malaysian national oil company Petronas. As I write, Douglas Oberhelman (former Chairman and CEO of Caterpillar) and Steven Kandarian (former Chairman and CEO of MetLife) are going nose-to-nose down to the wire at the finishing line.

The other two of the company’s new board members from this year, Michael Angelakis (Chairman and CEO of Atairos Group) and Jeffrey Ubben (Founder, Portfolio Manager and Managing Partner of Inclusive Capital Partners) were elected. They received the largest number of votes, 2,795,977,247 and 2,788,399,718, respectively, with a relatively small number of votes withheld. Following them in the vote tally, in order, were Ursula Burns (Former Chairman and CEO of VEON), Joseph Hooley (Former Chairman and CEO of State Street), Susan Avery (President Emerita, Woods Hole Oceanographic Institution), Angela Braly (former Chairman and CEO of Anthem), Kenneth Frazier (Chairman and CEO of Merck), and Mr. Woods.

In other words, Lead Independent Director Mr. Frazier and Mr. Woods got fewer votes than all of the other existing directors except for those fighting for the final slot. The silver lining for Messrs. Frazier and Woods is that only 22.1 percent voted for an independent Chairman so both will keep their jobs.

ExxonMobil Headquarters | GETTY

I note the somewhat curious vote of the gigantic Norwegian oil-based sovereign wealth fund, Norges Bank Investment Management (NBIM), the largest Sovereign Wealth Fund in the world with around $1.3 trillion in assets under management. It is the company’s seventh largest shareholder. The bad news for Mr. Woods is that it voted in favor of separating the roles of Chairman and CEO. The good news for him is that NBIM supported every director on the company’s blue proxy card.

Source link for this article