New York — ExxonMobil is heading for a proxy showdown after activist investor Engine No. 1 formally nominated four directors to the board of the energy giant, which is facing growing calls to change its strategy.

Engine No. 1, which confirmed it nominated the slate of directors on Wednesday morning, has the backing of the California State Teachers’ Retirement System.

“We believe that Exxon’s board needs new members who have proven success positioning energy companies for today as well as tomorrow, and who are sufficiently independent from the current board to ensure a clean break from a strategy and mindset that have led to years of value destruction and poorly positioned the company for the future,” Engine No. 1 said in a statement.

A representative for Exxon was not immediately available for comment.

The investment firm has already called on Exxon to refresh its board, overhaul executive compensation, and invest in more profitable drilling and clean energy. The firm said in a letter to the company’s board in December that changes are needed to help Exxon avoid the fate of other once-iconic American companies and to better position for long-term, sustainable success.

Another Exxon investor, DE Shaw & Company, has urged the company to slash capital spending and operating expenses to avoid cutting its dividend, people familiar with the matter said in December. DE Shaw also called on Exxon to improve its environmental reputation by, for example, setting clear and measurable emissions targets and incorporating them into its long-term incentive plans.

Shortly after the investors’ concerns were raised, Exxon said it plans to reduce upstream emissions intensity — those caused by pumping oil and gas from the ground — by as much as 20% by 2025, and cut gas flaring and methane leaks. Exxon said the move would be consistent with the goals of the Paris Agreement.

The pressure on Exxon to address sustainability comes as Exxon’s third-largest holder, BlackRock, on Tuesday, called for corporate leaders to disclose how their business plans will be compatible with a net-zero economy by 2050.

“While ExxonMobil has taken incremental steps in the face of financial and shareholder pressure recently, we believe a reactive, short-term approach is no substitute for a proactive, long-term strategy that addresses the threats and opportunities facing the company in a changing world,” Engine No. 1 said.

It’s the first proxy fight for Engine No. 1 since tech investor Chris James launched the firm in December 2020. Engine No. 1’s previously disclosed nominees to the Exxon board comprise Gregory Goff, former CEO offer of oil refiner Andeavor; Kaisa Hietala, an executive at Neste, another refiner; Alexander Karsner, a former US assistant secretary of energy; and Anders Runevad, previously a CEO of Vestas Wind Systems.



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