Exxon Mobil is the largest oil and gas company in the United States, with over 78,000 employees, operating more than 30 wholly-owned, subsidiary and joint ventures. The company is involved in exploration, production and refining of oil and natural gas resources. It is also engaged in chemical manufacturing, manufacturing and marketing of petroleum and other products.

On January 19, 2017, The New York Times published a damning report that exposed the secretive tactics of the oil giant Exxon Mobil. The report was based on decades of documents Exxon has just now disclosed, and it alleged that the corporation had spent decades covering up the effects of climate change. The documents also showed that the company was aware of the looming threat of climate change decades ago, but fought to keep that knowledge from the public.

In what can only be described as a PR crisis, ExxonMobil is being sued for allegedly suppressing scientific evidence that the threat of climate change is real, man-made, and is impacting the environment and our health. This development comes at a time when the company is under attack from the environmental movement and some law enforcement officials for allegedly violating laws on carbon pollution.

Exxon Mobil Corp. hasn’t caught investors’ attention for its massive profits in years. And yet, on a Friday night in January, the CEO of Exxon…

Darren Woods.

defended the company in a video address to an investor who owns about 0.02 percent of the oil giant’s shares.

Technical investor

Chris James

In December, Engine No. 1 launched an activist campaign against Exxon, calling the company a fossil fuel dinosaur with no coherent plan to survive the global transition to cleaner energy sources. In contact,

Charlie Penner,

the hedge fund veteran who helped lead the Engine No. 1 campaign, led Mr. Woods to pledge to lead Exxon to carbon neutrality by effectively reducing emissions – both from the company and its products – to zero by 2050.

Mr. Woods declined, saying that oil companies that make such promises have no real intention of keeping them. They weren’t interested in talking, he said in a recent interview. Frankly, they had no plan.

Woods, James and Penner did not come to an agreement on the controversial swap, said people familiar with the matter.

Since January, the No. 1 engine’s bid for four seats on Exxon’s board has become one of the most expensive proxy battles in history. Exxon has spent at least $35 million and the No. 1 engine – $30 million, according to official documents, in an increasingly difficult battle to win over shareholders who vote Wednesday at the company’s annual meeting.

Campaigners gained support this month when influential voting consultant Institutional Shareholder Services endorsed three of the four candidates for Engine No. board. 1. The hedge fund has not called for Woods’ resignation, but many see the vote as a referendum on his performance, and the outcome could affect his ability to execute his strategy.

This fight shows the challenge that Mr. Woods is up to: He is defending Exxon for pumping oil and gas at a time when the financial world is decisively shifting to financing a future based on renewable sources.

Darren Woods, President and CEO, Exxon Mobil Corp.


Richard Drew/Associated Press

One of the things I’ve learned in this job, and especially in this activist campaign, is that we need to and can do a better job of explaining what we do, Woods said. We are certainly a great American iconic company. We work with industry… it gets attention.

Less than a decade ago, Exxon was the largest U.S. company measured by market capitalization, and the idea of an activist campaign to challenge management would have been unthinkable. Former CEO of Exxon

Lee Raymond.

has at times publicly dismissed bank analysts’ questions about the company’s strategy as silly, and has previously called some analysts Mickey Mouse and Goofy.

The foundations of this attitude have largely collapsed. Exxon suffered a $22 billion loss last year when a pandemic sank demand for fuel and derailed Mr Woods’ ill-timed plan to dramatically increase spending to boost oil and gas production. The loss has given a boost to the No. 1’s campaign, which seeks to capitalize on investor fears about years of declining profits and concerns about the company’s future as governments tighten regulations to combat climate change.

Change of ownership

Exxon’s profits and stock price have declined over the past decade and its debt has increased, raising questions for the current CEO.

Lee Raymond.


Rex Tillerson


Darren Woods.

(2017 to present)

Average daily oil production

million barrels of oil equivalent

Lee Raymond.


Rex Tillerson


Darren Woods.

(2017 to present)

Average daily oil production

million barrels of oil equivalent

Lee Raymond.


Rex Tillerson


Darren Woods.

(2017 to present)

Average daily oil production

million barrels of oil equivalent

So far, three of the country’s largest pension funds – the California State Teachers’ Retirement System, the California Public Employees’ Retirement System and the New York State General Pension Fund – have said they will support the candidates in Motion No. 1.

A spokeswoman for the No. 1 engine denied that it was unwilling to engage with Exxon. The fund blames Exxon’s board for the company’s decline, arguing that its own nominees, unlike many of the current directors, have energy experience.

Engine No. 1’s plan is to add four directors, all of whom have looked profitably at the energy industry and can help management achieve long-term success in a rapidly changing world, she said.

Share your ideas

What is your position on this proxy fight? Join the discussion below.

On Monday, Exxon sent a letter to shareholders promising to appoint two directors with energy and climate expertise over the next 12 months in a months-long charm operation. Since December, Exxon has spent millions of dollars on ads and calls to shareholders. The company appointed three new directors and announced changes that some investors had long called for, including the creation of a carbon-reduction technology unit and the first disclosure of Exxon product emissions.

At some point, you have to decide: If you’re not with me, you’re not with me, said Mr…. Woods in 2019 during an interview at his alma mater, Texas A&M University.

Some investors fear that this attitude has made the oil giant slow to respond to the changing energy landscape.

Access to Exxon Mobil’s chemical complex at Baytown, Texas.


Brandon Thibodeau for The Wall Street Journal

At a 2019 meeting of business leaders with Pope Francis at the Vatican, the pope addressed Exxon CEOs and executives,



Royal Dutch Shell


BlackRock Inc,

State Street Corp.

and others to take moral responsibility for helping to clean up the planet. Mr. Woods acknowledged the need to address climate change, but said Exxon must do so in a way that is consistent with its commitment to shareholder returns. His response disappointed his colleagues at the meeting and was seen as tactless, according to people familiar with the matter.

Stephen Arbogast,

The 32-year-old Exxon executive, who is now director of the Energy Center at the University of North Carolina-Chapel Hill, said the role of an executive of a major oil company has changed to one of communicating the company’s future in a low-carbon world to a broader audience.

Many members of this audience believe that the climate is an existential threat and that oil and gas should be a sunset industry, Arbogast said.

Reinforcement Grade

Mr. Woods said he has no ambition to become CEO of Exxon. Just like his predecessor,

Rex Tillerson,

offered her the job in 2016, Mr. Woods that he didn’t want her.

Frankly, I’m not interested in being in the spotlight, said Mr…. Woods, adding that he has learned to deal with it.

Whatever his ambitions, current and former colleagues of Mr Woods say that since he joined Exxon, he has been driven by a desire to climb the corporate ladder.

The son of a military man, Woods grew up on or near American bases around the world. He was an offensive lineman on his high school football team in Texas. He followed his high school sweetheart, who is now his wife, to Texas A&M University and earned a degree in electrical engineering. He earned an MBA from Northwestern University and joined Exxon in 1992.

Finally, Mr. Woods is ready to take over the case. The board chose him in part because he went through Exxon’s refining division, where profits are made by extracting a penny from each barrel. He also knew the language of Wall Street because he worked in Exxon’s investor relations department, the interviewees said. The administration wanted to break with Mr. Tillerson, a simple Texas oilman who has spent billions of dollars on expensive oil projects that have yielded nothing, these people said.

Current and former Exxon executives describe Mr. Woods as a demanding man. Before approving investment ideas, he subjected employees to a marathon review process that sometimes took more than a day. He used the Exxon practice of randomly dividing executives into blue and red teams, one to destroy the idea and the other to defend it.

Large bets

Some former Exxon executives said Mr. Tillerson left it in a bad position.

In 2016, the last full year of Mr. Tillerson’s tenure, Exxon’s return on equity was 1.3 percent, compared to 26 percent in 2005, the last year of Mr. Raymond’s tenure, according to S&P Global Market Intelligence. When Tillerson took the helm, the company had nearly $21 billion in military cash, and when he left, the company had more than $39 billion in net debt.

Some of Mr. Tillerson’s largest investments, including investments in Canadian oil sands and U.S. shale gas, were made during a period of high commodity prices and did not produce high returns when prices fell. Exxon has also had to pull out of some joint ventures with state-owned companies in Russia because of Western sanctions. This year it wrote off $19 billion on U.S. shale gas, Canadian oil sands and other assets. Mr. Tillerson did not respond to a request for comment.

Rex Tillerson, former CEO of Exxon Mobil Corp. in 2019.


Gina Moon/Bloomberg News

Yet Woods continued on Tillerson’s big-spending path, unveiling a $230 billion investment plan in 2018 to produce an additional 1 million barrels of oil and gas per day by 2025. He tried to differentiate his plan by saying it was a return to the old Exxon way of doing business: large, disciplined investments in promising projects that can produce results when oil prices are low.

Even before the pandemic, this strategy did not produce immediate results. According to S&P Global Market Intelligence, production has stagnated in 2019, Exxon has achieved only a 3% return on equity this year, and the company’s net debt has risen to nearly $50 billion.

The proliferation of Covid-19 has made Mr. Bauer’s plans more difficult to implement. Wood canceled. As countries around the world imposed quarantines, demand for fossil fuels plummeted. Exxon responded by reducing its planned capital spending by about a third between 2021 and 2025 and announcing plans to cut up to 15% of its global workforce.

Last year’s annual loss of $22 billion was the largest ever. In August, the company was removed from the Dow Jones Industrial Average after being in the index for nearly a century.

Chief Executive Officer Exxon, Merck & Co.

Kenneth Frazier,

defended Mr. Woods’ performance in an interview, saying he had to make tough decisions about stopping projects and carefully selecting new ones once he was CEO.

Darren has been well on his feet during his tenure, said Fraser, who is stepping down as CEO of Merck in June. CEOs should be judged partly on how well they develop and execute plans at the end of the cycle.

Exxon chief Kenneth Frazier, chairman and CEO of Merck & Co, joined President Joe Biden in March.


Andrew Harnick/Associated Press

Some of Mr. Woods’ biggest investments could pay off for Exxon if oil demand recovers and Exxon’s rivals, including BP PLC and Royal Dutch Shell PLC, shift money from oil production to renewables. In Guyana, where Exxon made one of the largest oil discoveries in recent years during Tillerson’s tenure, analysts say the company could achieve returns of 20 percent or more, much higher than the returns on renewable energy projects.

However, many investors are becoming increasingly frustrated. Exxon shares recovered from a sharp decline during the pandemic, but are still trading at about 1.5 times book value, compared with about 3.5 times book value shortly after Mr. Raymond’s departure.

Hard sell

Engine 1 is counting on this dissatisfaction. He hammered investors on Exxon’s financial problems and also questioned Exxon’s refusal to take into account the idea that demand for fossil fuels could fall faster than expected.

Mr. Woods, unlike Mr. Raymond, acknowledged the contribution of fossil fuels to climate change and said Exxon can help reduce emissions by continuing to develop oil and gas. In March, he unveiled a strategy for Exxon to remain the largest Western oil producer. This has proven to be a challenge for some investors.

Even large asset managers like BlackRock are under pressure to push their portfolio companies to take more climate protection measures. BlackRock, State Street and Vanguard together own more than 20 percent of Exxon and could tip the balance in Wednesday’s vote. All three companies have committed to reducing carbon emissions to zero by 2050 or earlier. The International Energy Agency has said that investment in new fossil fuel projects must be halted immediately if the world is to meet this target.

Legal & General,

Britain’s largest asset manager, who owns about $1 billion in Exxon shares, said this month he could not support Mr Woods’ strategy and would vote for the No 1 candidate for the engine.

John Hoeppner,

who heads the company’s renewable investment division in the U.S., said his team has met with Exxon representatives several times in recent months and noticed a more conciliatory tone, but that Exxon has not made any substantive proposals to address the company’s concerns.

It went something like this: We have listened to you, the investor community, and fulfilled our obligations, now let us move on, he said. They do not see that there is a structural problem.

Exxon Mobil chemical complex in Baytown, Texas, last year.


Brandon Thibodeau for The Wall Street Journal

Other investors said they had spoken directly to Mr Woods in recent months and that he had improved his relationship with investors since becoming chief executive. But they say Mr Woods is not changing his mind about rising demand for oil and gas in the coming years and is unwilling to accept suggestions that Exxon should hedge its bets.

The No. 1 engine argued that Exxon’s actions since the beginning of the proxy fight have been insufficient. She portrayed Exxon’s low-carbon division as an exercise in greenwashing focused more on public relations than investment. According to the foundation, Exxon refused to meet with its applicants. Exxon said it reviewed the candidates for the No. 1 engine and decided they did not meet the panel’s standards.

Despite the controversy, the No. 1 maker said it was not pushing Exxon to get out of the oil and gas business, but to gradually diversify to be ready for a world that will need less oil and gas. The commitment to emit no carbon dioxide is not only a win for the company, but also a business imperative for Exxon in a changing energy market, the company said.

Woods believes Exxon will be a leader in the energy transition. He said Exxon is making significant investments to reduce carbon emissions while meeting global demand for oil and gas.

Whatever the future holds, Woods said, we will be more valuable. That’s our goal.

Email Christopher M. Matthews at [email protected]

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