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Dissident shareholders win a third seat on ExxonMobil board

Days after voting ended, the oil giant concedes victory for Alexander Karsner, a former Energy Department official

Representatives of discontented ExxonMobil shareholders have won a third seat on its board of directors. (Richard Drew/AP)

Discontented shareholders have grabbed a third seat on the ExxonMobil board of directors in a reflection of widespread unhappiness with the oil giant’s climate change strategy and its financial performance in recent years.

ExxonMobil, which fought hard to defeat a four-person slate nominated by a small hedge fund called Engine No. 1, conceded in a Securities and Exchange Commission filing that former Energy Department official Alexander Karsner had won a majority of votes from shareholders.

Karsner placed 11th in a race for 12 board seats, about 1.2 percent ahead of two of ExxonMobil’s nominees.

Though the new board members will be in a minority, their presence could alter the tone of the oil giant’s board meetings, where members are traditionally picked by the chief executive. And the three-person faction, which has vast industry experience, could persuade the other board members to reconsider key positions.

The fight for the soul — and the future — of ExxonMobil

“It’s a watershed event when an activist investor takes three seats on the board of such a major company, and with the energy transition front and center in the bid to replace several board members, it seems inevitable that Exxon will be rethinking its climate strategy,” said Jason Bordoff, founding director of the Center on Global Energy Policy at Columbia University. “In this case, some actions to address shareholder concerns with financial performance, like selling off certain assets, may also align with the demands of climate-focused shareholders.”

At the May 26 annual meeting, ExxonMobil announced that two of Engine No. 1′s other nominees, Gregory J. Goff, a longtime oil refining executive, and Kaisa Hietala, who ran a biofuels program at a Finnish oil refiner, had won spots on the board. Anders Runevad, a former executive at Vestas Wind Systems, fell short.

The company and the hedge fund spent tens of millions of dollars, according to people familiar with the dispute, who spoke on the condition of anonymity to speak about internal deliberations.

Psychological research shows that climate change can alter an individual's mental health both directly and indirectly, impacting how we respond to this crisis. (Video: John Farrell/The Washington Post, Photo: Daron Taylor/The Washington Post)

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Many analysts have interpreted the results of the shareholder vote as a condemnation of ExxonMobil chief executive Darren Woods. Woods was reelected to the board after placing eighth in the voting, though his margin of victory was wide.

Three of the people ExxonMobil nominated to the board were defeated.

“Shareholders have spoken and the message is clear. It’s time for board accountability,” said Anne Simpson, the managing investment director for board governance and sustainability at the California state pension fund. “We need climate competent directors willing and able to drive the energy transition. The votes at Exxon mark a new era in financial markets, with investors behaving like owners.”