ExxonMobil: One Year Later.

By Engine No. 1

May 25, 2022

With the support of fellow Exxon shareholders, we successfully elected three new independent directors…[with] outstanding leadership skills and diversified energy experience critically needed on the Board.

When we first launched our Reenergize Exxon campaign, we noted that no company has been more influential in the oil and gas industry than ExxonMobil (“Exxon or the “Company”). It was clear, however, that the oil and gas sector and the world in which it operates were changing.

Prior to our campaign, Exxon’s market capitalization had collapsed by half, significantly underperforming its peers over any relevant time period, and its stock was no longer included in the Dow Jones Industrial Average. This historical underperformance occurred even as demand for oil and gas grew. And while the Company struggled in a market with continued high demand for hydrocarbons, it also had no credible strategy to create value given the increasingly uncertain demand outlook in a decarbonizing world.

Starting with our initial letter in December 2020, subsequent public materials, and discussions with all parties involved, we made three primary asks of Exxon. In our view, by addressing these fundamental problems, the Company would create value for shareholders. With the support of fellow Exxon shareholders, we successfully elected three new independent directors to the Company’s Board: Greg Goff, Kaisa Hietala, and Andy Karsner—all of whom have outstanding leadership skills and diversified energy experience critically needed on the Board.

Although all of Exxon’s directors are independent—including the Engine No. 1 nominees—we felt it was appropriate to reflect on some changes and progress of note at Exxon over the past year:

Ask #1: Refresh the Board of Directors with energy experience.

Prior to our campaign, Exxon’s Board had no independent directors with outside energy experience. We recognized that by having new Board members with energy experience – spanning traditional fossil fuels through lower-carbon sourcing of energy, including technology and regulatory experience—the Company would be best positioned to create value for shareholders. This issue was of course resolved through the results of the election last year, with three of Engine No. 1’s candidates being elected and providing value-additive experience across a wide range of relevant drivers of performance for an energy company like Exxon. We are glad to see our nominees re-elected to the Board this year.

Ask #2: Impose greater long-term capital allocation discipline.

Exxon’s history of chasing production growth in the face of poor capital returns was the primary driver of the Company’s share price underperformance. By our estimates, Exxon destroyed more than $170 billion in shareholder value through poor capital allocation over the past decade prior to our campaign.1 As recently as last year, the Wall Street Journal reported, Exxon “had been unable to fund its dividends through free cash flow alone even in 2019 before the pandemic.”2

Immediately before the launch of our campaign, Exxon decreased its annual capex budget for 2021 from $30–35 billion to $20–25 billion per year given the constraints the Company had put on its balance sheet.3 Over the course of the campaign, Exxon further abandoned its misguided pursuit of 25% production growth by 2025 and instead targeted relatively flat production.4

Importantly, post-campaign and with the new directors in place, Exxon has maintained its capital-spending discipline (has not increased its capital budget) even with the runup in commodity prices over the past 12 months. This discipline has allowed Exxon to pay down more than $20 billion in debt to bring debt levels back to prepandemic levels.5 In addition, Exxon recently announced that it would repurchase up to $30 billion of Company shares through 2023, an increase from its initial $10 billion program. This is Exxon’s first meaningful share repurchase program since 2010.6

Ask #3: Implement a strategic plan for sustainable value creation in a decarbonizing world.

Until last year, Exxon had positioned itself in the market with an expectation that demand for oil and gas would grow continuously for decades to come and had little regard for the impact of carbon emissions on society. As Forbes has noted, Exxon has not “enunciated any kind of holistic strategy for navigating the carbon transition.”7 Further, Exxon went so far as to refer to net-zero emissions targets as being a “beauty contest.”8

Since the election of Engine No. 1’s candidates to the Board, Exxon has taken a multitude of actions to reduce its emissions footprint and has begun to lay the foundations for a viable low-carbon business strategy:

  • November 2021: Committed to investing $15 billion over the next six years to advance low-carbon solutions.9
  • December 2021: Announced that the Company had achieved 2025 Scope 1 and 2 greenhouse gas (GHG) emissions reduction targets nearly four years early.10
  • December 2021: Announced new 2030 Scope 1 and 2 GHG emissions reduction targets.11
  • December 2021: Announced net-zero GHG emissions in Permian by 2030, including eliminating flaring in the basin.12
  • January 2022: Announced ambition for net-zero Scope 1 and 2 GHG emissions by 2050 across operated assets, including an annually published report outlining the Company’s strategic plans to achieve net zero.13
  • January 2022: Added the Low Carbon Solutions business unit as one of three units around which the Company is organized. The other two business units are Upstream and Product Solutions.14
  • March 2022: Brought in an external hire in Dan Ammann, former head of General Motors’ Cruise, to lead the Low Carbon Solutions business unit.15

While we of course don’t sit within the Company, we are supportive from a cultural standpoint of the consolidation of its headquarters to Houston and the additional external hires at the senior level, including a chief financial officer, which is a break from the past. Further, Exxon now displays on its website an itemized list of all political financial contributions, providing an important level of transparency in its lobbying activities.

Since the launch of our campaign, Exxon has significantly outperformed its peers in the oil and gas industry and added more than $200 billion to its market capitalization, including $130 billion+ since the May 2021 Annual Shareholder Meeting.16

We are quite certain that even the shareholders who did not vote for our slate would support the progress Exxon has made during the past 12 months.

We applaud Exxon for the strong performance and the changes it has made over the past year, including maintaining capital allocation discipline, setting more aggressive GHG emissions reduction targets, and increasing resources for its Low Carbon Solutions business unit.


We applaud Exxon for the strong performance and the changes it has made over the past year, including maintaining capital allocation discipline, setting more aggressive GHG emissions reduction targets, and increasing resources for its Low Carbon Solutions business unit.

The Company has demonstrated its ability to move faster by pushing aggressively toward emissions reduction targets, which it is now on course to meet four years ahead of schedule. Its new targets are expected to reduce company-wide absolute GHG emissions by ~20% by 2030 and reach net-zero Scope 1 and 2 GHG emissions from operated assets by 2050.17

Our North Star as active owners is to create value as we transition to a more sustainable world, which we believe for oil and gas producers continues to boil down to bolstering their social license to operate. With this in mind, we continue to engage with the Company’s leaders on a variety of issues, including methane emissions, low-carbon businesses, and governance.

Methane Emissions

An immediate way that we believe Exxon can reduce its GHG emissions is by addressing its methane emissions through third-party verified monitoring and aggressive reduction targets. We believe that Exxon should join the Oil & Gas Methane Partnership 2.0, which establishes third-party verified monitoring and methane emissions reduction targets.

Low-Carbon Businesses

We think the establishment of Exxon’s Low Carbon Solutions business unit as one of three core business lines for the Company is a step in the right direction. The next step would be to continue to leverage its world-class in-house engineering talent, its energy systems know-how, and its balance sheet to create value around decarbonizing the economy. This will undoubtedly take time to develop, as we said during the campaign, and we look forward to seeing the Company’s strategy and progress continue to develop and be shared with shareholders.


When we founded Engine No. 1, we set out to drive global change by running toward—not away from—the world’s biggest problems.18 Sole reliance on fossil fuels is unsustainable both environmentally and geopolitically, and we need to continue to work to align energy development and use with the broader societal goal of decarbonization. There are no simple or easy solutions, and divestment from fossil fuels isn’t the answer. Decarbonizing the economy is a challenge but we welcome the challenge because we think within that challenge lies opportunity.

We remain excited about the future, and we hope you are too.

Learn more about the Reenergize Exxon campaign.

Learn more

© 2022 Engine No. 1 LP. All rights reserved.

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This document is for general informational purposes only. This was selected as the opportunity with which Engine No. 1 had the highest level of engagement, the only proxy contest in Engine No. 1’s history as of the date of the preparation of this document, and so was selected on the basis of objective, non-performance based criteria. This was prepared to respond to inquiries about what Engine No. 1 thought about the progress at Exxon as the anniversary of the proxy contest approached. Investment transactions in which Engine No. 1 may participate and the methodology employed by Engine No. 1 in evaluating and executing such transactions may differ from the Exxon case shown here, due to, among other factors, the availability of investment opportunities, general economic conditions, differences in other market conditions, the availability or lack thereof of financing, industry-specific conditions, political developments, and other relevant factors. These results are particular for Exxon and are not necessarily indicative of future investments or performance of Engine No. 1 in future engagements.

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