Reenergize Exxon is a campaign led by Engine No. 1 to position ExxonMobil for long-term, sustainable value creation.

We believe repositioning ExxonMobil to achieve this goal will require an understanding of the trends shaping the future of energy and the opportunities they create, yet none of ExxonMobil’s current independent Board members have any other energy industry experience.

To ensure ExxonMobil avoids the fate of other once-iconic American companies, and to protect and enhance shareholder value, we believe the Company must:

• Refresh the Board with highly qualified, independent directors who have track records of success in energy and can help the Board position ExxonMobil to successfully evolve with changing industry dynamics.
• Impose greater long-term capital allocation discipline by applying more stringent approval criteria for new capital expenditures including lower required break-even oil and gas prices.
• Implement a strategic plan for sustainable value creation in a changing world by fully exploring growth areas including more significant investment in clean energy, to help the Company profitably diversify and ensure it can commit to emission reduction targets, all with the benefit of a board better qualified to consider such opportunities.
• Overhaul management compensation to better align incentives with shareholder value creation.

Poor Long-Term Capital Allocation Strategy – ExxonMobil maintains a long-term strategy of aggressive spending despite declining returns.  This undisciplined spending delivers suboptimal returns, eats away at ExxonMobil’s book value, and makes investors doubt the Company and its ability to pay dividends. ExxonMobil has not successfully adapted to changing industry dynamics, including higher production costs and growing long-term demand uncertainty.

Lack of a Long-Term Plan to Enhance and Protect Value – While any decision to diversify must be carefully considered, the question of how best to position ExxonMobil for the long-term merits a comprehensive approach by a board with the knowledge base to do so. We are not suggesting that ExxonMobil can or should diversify overnight.  However, given the Company’s size, global influence, expertise in complex energy projects, and world-renowned engineers and scientists, the possibility of long-term repositioning demands full consideration by directors with the relevant experience to do so.  While the Company has publicly and regrettably dismissed carbon emission reduction targets as a “beauty competition,” such targets have more than cosmetic value to investors.  Decreasing price/book multiples, increasing dividend yields, and increasing costs of capital all show that the market ascribes a declining terminal value to ExxonMobil and its peers because the market believes these companies are poorly positioned for an energy transition.  Companies like ExxonMobil that have few cards to play in the event of a material long-term energy demand shift – and that indicate they have no intention of changing this outlying position – are unlikely to be highly valued by the market.

Failure to Align Management Compensation with Value Creation for Shareholders — Unlike many of its peers, ExxonMobil does not disclose the weightings it assigns to various performance metrics or specific targets that management must meet to achieve them.  It has also not disclosed cost or balance sheet-focused metrics used to measure management performance, creating a lack of accountability for project cost overruns, higher production costs, or balance sheet deterioration.

ExxonMobil currently has no independent directors with any other energy industry experience.  The four highly qualified, independent individuals we have identified can bring to the ExxonMobil Board much-needed experience in value-creating, transformational change in the energy sector.

Together this group has a diverse set of experiences in successful, global energy operations and decades of leading value-creating transformations in the industry.  We believe that collectively they can help the Board unlock sustainable, long-term shareholder value by addressing the fundamental issues facing the Company.

We have reviewed the qualifications of these individuals with the second largest pension fund in the U.S., the California State Teachers’ Retirement System (“CalSTRS”), which owns over $300 million in value of the Company’s stock.  CalSTRS has informed us that, based upon the qualifications of such individuals, it intends to support them if nominated for election to the Board, and we believe that other long-term oriented investors will share this view.