ExxonMobil (XOM) Faces Opposition Over Climate Activist Lawsuit

Exxon Mobil Corporation XOM is facing significant backlash from major investors due to its recent legal actions against climate activist investors.

The fund, managed by Norges Bank Investment Management (“NBIM”), announced that it would vote against the reappointment of ExxonMobil’s directors due to the company's lawsuit targeting climate activist investors.

This decision comes in response to XOM’s lawsuit targeting two small investor groups advocating for the company to take stronger measures to reduce greenhouse gas emissions.

The lawsuit has raised alarms among activists, proxy advisers and shareholders who argue that it seeks to suppress debate at public companies. Calpers, the largest public pension plan in the United States, has joined the opposition, stating that it will vote against the re-election of all ExxonMobil directors, citing the supermajor’s reckless legal actions.

NBIM, which is XOM’s sixth-largest shareholder with a 1.23% stake according to LSEG data, emphasized the importance of protecting shareholder rights and expressed concerns about the potential impacts of litigation against shareholders who submit proposals. NBIM has consistently opposed the election of Darren Woods to the board since 2017, based on their principle that the roles of CEO and Chair should not be held by the same individual.

Shareholder proxy advisor Glass Lewis has also recommended that investors vote against the reappointment of certain directors, highlighting ExxonMobil’s unusual and aggressive tactics in pursuing the lawsuit against activist investors. However, XOM argues that securities regulators have permitted too many resolutions to proceed to a vote, imposing financial burdens on companies. The company hopes that its legal action will lead to reforms in this area.

As the AGM approaches, the mounting opposition from influential investors like NBIM and Calpers underscores a growing demand for greater corporate accountability and proactive climate action within ExxonMobil’s leadership. The outcome of the vote will be closely watched as a potential turning point in the ongoing debate over shareholder rights and corporate responsibility in addressing climate change.

Zacks Ranks & Stocks to Consider

ExxonMobil currently carries a Zacks Rank #3 (Hold).

Investors interested in the energy sector may look at some better-ranked stocks like SM Energy Company SMEcopetrol S.A. EC and Eni SpA E, each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

SM Energy is an independent oil and gas company engaged in the exploration, exploitation, development, acquisition, and production of oil and gas in North America.

The Zacks Consensus Estimate for SM’s 2024 and 2025 EPS is pegged at $6.63 and $7.46, respectively. The stock has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.

Ecopetrol operates across various sections of the oil and gas industry, including the exploration, development, and production of oil and gas, refining, transportation, and the sale of petroleum products.

Ecopetrol has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days. The Zacks Consensus Estimate for EC’s 2024 and 2025 EPS is pegged at $2.55 and $2.63, respectively.

Eni SpA, based in Rome, Italy, is among the leading integrated energy players in the world. The company’s share buyback program is expected to increase to €1.6 billion from the previously declared guidance of €1.1 billion in 2024, subject to shareholder approval.

The Zacks Consensus Estimate for 2024 and 2025 EPS is pegged at $4.49 and $4.34, respectively. The company has a Zacks Style Score of A for Value and Momentum. The company has witnessed upward earnings estimate revisions for 2024 and 2025 in the past seven days.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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