ExxonMobil’s Investor Magical Mystery Tour (Waiting To Take You Away!)

ExxonMobil’s Investor Magical Mystery Tour (Waiting To Take You Away!)

Share to Linkedin My Oxford colleague Professor Colin Mayer and I have written before about the campaign Engine No. 1, a new and small hedge fund, is waging against the oil and gas giant ExxonMobil. The purpose of their campaign is to place four directors on the board who can help the company create a business strategy that is both financially and environmentally sustainable. It is absolutely essential that all four be elected. By way of a little context, ExxonMobil has dramatically underperformed its peers over the last 10 years (-57. 2 percent in total return pre-COVID). Since 2010 its credit rating has been downgraded twice by S&P, which has put it on negative watch. Contributing to this downgrade is that its net debt has ballooned from $7 billion in 2010 to $63 billion in 2020. This debt has been used to fund projects at a spending rate greater than any of its peers, projects that require the highest oil breakeven price of any of its peers in order for them to be profitable. It has no credible plan to protect and create value during the inevitable energy transition. A concise summary of the reality of ExxonMobil's corporate strategy is,