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Exxon Mobil: Shareholder-Unfriendly Management


  • Exxon Mobil's management seems like it's become increasingly shareholder-unfriendly.
  • Specifically, the company has increased moves to stop shareholder strength, ignored climate change, and maintains very high capital spending.
  • The company has a respectable asset base that justifies its valuation. However, the company's other moves should be paid attention to.
  • We see the company like Occidental Petroleum - great assets but bad management.
  • I do much more than just articles at The Energy Forum: Members get access to model portfolios, regular updates, a chat room, and more. Get started today »

We've written about Exxon Mobil (XOM) a number of times so far. The company, as one of the largest publicly traded oil company, with a $200 billion market capitalization, has dropped more than 30% YTD. While we feel the company has an impressive portfolio of assets, we feel the company has made a number of shareholder-unfriendly moves recently that put investors in a difficult position.

Exxon Mobil - Exxon Mobil

Concentration of Voting Power

As wealth in the United States gets increasingly concentrated, one of the largest sources of concern is the increased concentration of voting power among some of the largest shareholders. This is an issue for two significant reasons.

Top 10 Owners of Exxon Mobil - CNN Money

In a world of increased popularity of ETF investing, some of the largest ETF groups, like The Vanguard Group, are seeing their power increase dramatically. That massive increase in power is affecting how votes happen - research on the subject is still happening. However, most research agree that these major firms either vote in line with company recommendations or against ESG issues.

As Exxon Mobil continues to recommend positions that are against the interest of the common shareholder, the position and how these firms vote normally result in them passing.

Exxon Mobil Shareholder Positions

Exxon Mobil has recently recommended against several positions meant to strengthen shareholder power.

Exxon Mobil Shareholder Proposals - Exxon Mobil Shareholder Meeting

Exxon Mobil's recent shareholder meeting had 2 proposals to increase the strength of common shareholders. For those who are wondering, both measures failed after being put to a vote and Exxon Mobil recommending against them. The company recommended against an independent Chairman and a proposal to decrease the requirement for a special meeting from 15% to 10%.

This is significant for a number of

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This article was written by

The Value Portfolio profile picture

The Value Portfolio specializes in building retirement portfolios and utilizes a fact-based research strategy to identify investments. This includes extensive readings of 10Ks, analyst commentary, market reports, and investor presentations. He invests real money in the stocks he recommends.

He is the leader of the investing group The Retirement Forum with features including: model portfolios, macro overviews, in-depth company analysis and retirement planning information. Learn more.

Analyst’s Disclosure: I am/we are long XOM, CVX, OXY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (328)

"They have always been shareholder-unfriendly"-Charleyman1. I don't know what your experience with this stock has been, but I'm getting a 9+% dividend yield from this holding and thats far from unfriendly. Add on a 55% PPS appreciation in less than 3 months and I'm far from a XOM critic.
You must be new to Exxon. They have always been shareholder-unfriendly. And this is a good thing. Never intimidated by anyone.
Raise your hand if you missed the boat. I've been yelling screaming buying opportunity for three months.
Not me. I picked up lots of shares at 30.31 in March.
WisdomoftheWise profile picture
To properly rate management, compare the company’s performance relative to their peers in the past decade. During that time, CVX has narrowed the valuation gap between the two companies. XOM has long been the GE of the oil industry, but look at where GE is now. I prefer to invest in a company that has good management, not what it once was.
How can we calculate XOM's fair value in this turbulent time?

"How can we calculate XOM's fair value in this turbulent time?"

One way is to look at the value of the oil they are in control of in the Texas Permian Basin.

The Texas Permian Basin is the safest and most cost effective place on planet Earth to produce oil, natural gas, and petrochemical feedstocks.


Exxon Mobil has stated publicly that, with their advanced drilling and fracking technology, they might produce 60 billion BOE just from the 275,000 acres of land they purchased from the Bass Family. If so, the oil, natural gas, and NGL's from that land is worth $Trillions. Using their refineries, petrochemical plants, and LNG plants, Exxon Mobil will turn those $Trillions into many additional $Trillions.

But OXY has, by far, the sweetest and juiciest plum of an asset in the Texas Permian Basin.

Long XOM, OXY, DVN, CDEV, NBL, and fortunately, some gold, silver, rare earths, platinum, and copper mining stocks. However, keeping some dry powder, just in case.
I bought Exxon in march around $30.23. I think it is a great company and I have made good money so far. Over $50 now.
Another example of liberal Kool Aid "science" exposed. Just like global warming "consensus science." www.thegatewaypundit.com/...
doctorslernon profile picture
That was a low blow comparing XOM management to OXY management. XOM's C-suite may not be great, not the shareholder destruction and side dealing to avoid shareholder votes by Vicki Hollub has been/is obscene.
JJMA1 profile picture
I never in my wildest dreams thought that I would be holding shares of XOM, but in March I became a shareholder and in late May, I added. At the moment, I think Oil has about 5-10 years left. Probably one more bull market left. Once that happens, I will most likely sell almost everything to do with energy in my portfolio. Oil and Gas have the best EROI and I doubt it will change until Fusion becomes commercially viable.
You sound like @Kirk Spano with idea of one more move left for oil @JJMA1 .
JJMA1 profile picture
If you believe in capitulation prior to the emergence of a bull market, then when oil hit zero recently, you might view that as a capitulation. USOil is now at 39.17 and UKOil (brent) is priced at a comfortable 42.00. Today might be the worst day to purchase oil stocks because after a run like this, we might be due for a punishing correction on profit taking, but that remains to be seen. Glad I bought some in March, now I just wish I had have purchased more.
Doomsday! End of the world in 5-10 years! LOL
Don't care about "global warming" nonsense. All else sounds good: a shareholder-friendly commitment to the dividend, and borrowing at record low interest rates to fund CAPEX that promises significant returns.
I am a shareholder of Exxon precisely because of their standing up for their shareholders against climate alarmists, and Exxon's refusal to waste shareholder funds (a la BP and RD) on uneconomic "green" projects to ingratiate themselves with demagogic junk science mobs. I own XOM because I think fossil fuels are our present and long term future, and that wind power and man-made global warming is and will remain science fiction. As far as I'm concerned, these corporate policies are in my best interest as a shareholder.
Sorry, but this has to be one of the most incoherent essays ever posted on SA.

The Morningstar service has an excellent description of Exxon's American midstream strategy.
Which fits perfectly with Exxon's vertically - still truly integrated - business model.

It is very possible given deeply discounted American ngls as petrochemical feedstocks, that return on capital could double. The question is not the opportunity. Rather management's ability to execute.

If Exxon is successful, it will mean ten of thousands+ $100k a year oft union jobs in America. As neither poor old collapsing Europe or the communists oppressing the great Chinese people can complete with out feedstock cost advantage.

So I am in full agreement with management selling off their European reserves and wildly dated midstream European assets. To fund the American investment strategy. Further, the European nescience mania about gw is a prime reason they are sadly failing economically and socially.

True XON strategy has changed from a utility to a growth business. Specifically an American growth business. But this in no way makes them shareholder unfriendly. I do understand how this would drive gw fanatics crazy.

But if Xon is successful, total emissions from refining and petrochemicals will be greatly reduced. America is clean and efficient. Communists are filthy and corrupt. It is the nature of authoritarian/totalitarian systems.
Well, after being dissatisfied with their Climate Change actions, are you next going to take them to task for being part of the BLM issue?
05 Jun. 2020
Business 101
The biggest and strongest knock out competitors when they are weak. Strong companies love culling times. It's not Disney out there, anything green is just PR. They are spending to position better and take advantage of the situation. Takes a lot of oil to make those green windmills and EVs.......just something that makes people feel good.
Climate change is a hoax perpetuated by "scientists" who earn millions in grant money to create a problem that does not exist so globalists can take over our everyday lives and subrogate we climate deniers to support their elite existence in guided cities for the intellectual superiors they surround themselves with. See "Hunger Games" for a futurist view of their utopia.
The scientists need to eat too. Don't begrudge them a grant @THM Houston .
Fraud is illegal.
Ok. Yah that’s it. You deniers are smarter than the scientists, have done much more research and have no reason for bias. Geez now I realize it was all a hoax......sorta like Covid 19.
For the investors that bought into the doom and gloom panic of alarmists suggesting that companies like this were going bankrupt or would slash their dividend: let that be a lesson to you! Never trade on emotions. Look at the facts and take a longer term view of your investments. To those who took advantage of this generational buying opportunity-congratulations! Enjoy the 3 month 60%+ PPS appreciation and the double digit yield you have captured! We'll all wait patiently for the apology of these doom and gloom authors that suggested liquidation of this stock. Don't hold your breath.
We are going to be using petroleum as long as we have it. It’s used in everything important to us. If we put our U.S. company’s out of business you can be assured Saudi Aramco will happily step up and supply not only the oil but the chemicals vital to all of our businesses. They are building plants as our green people try to destroy our business. Do you know how many refineries they have in the U. S.? Do you believe they are concerned about how green they are? I’m thankful that Exxon is doing what it is doing. We are in the oil business.
Veritas1010 profile picture
Look where following the green got Shell...a dividend cut of 66%.

No thank you!
Shell got clambed up when they cut the dividend @Veritas1010 .
Carbon emission trading is growing; just an excerpt below from site:

Emissions trading has grown rapidly for a market that is just over 20 years old. From $47 billion in 2008, the carbon market is now worth more than $80 billion. Carbon credits are traded both on established markets, such as the Chicago Mercantile Exchange, and newer forums, such as London’s Carbon Trade Exchange.
AEGISBMD profile picture

$80B? I think XOM spends more than that on CAPEX...
06 Jun. 2020
12 years, didn't even double. You call that rapid?
495783 profile picture
The science is settled! Climate change is a hoax perpetrated by control freaks. How does ignoring climate change Make management shareholder unfriendly ?
Ah. Thanks for setting us straight on this hoax. I never knew until you told us. Dumb science. Geez

But regardless how real climate change is we still do and will use/need oil and gas.
Dumb science? Nope, "fraudulent science." Just like this.www.thegatewaypundit.com/...
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