Will Things Change at Exxon Mobil (XOM)?
Last month (last week in fact), the Rockefeller family launched a proxy battle to change the direction in which Exxon Mobil (XOM) is headed. They’re main goal was to dilute the power of Rex Tillerson, the current CEO and chairman. Because of Exxon’s amazing profits, though, shareholders showed their confidence in Tillerson by defeating the proposal put forth by the Rockefeller family. (The parent of Exxon, Standard Oil, was founded by John D. Rockefeller.)
But all may not be lost for the Rockefeller family, who was hoping that a shake-up in corporate governance at Exxon would result in changes that are more environmentally friendly. The Wall Street Journal reports that things could take a more environmentally turn in a natural way:
Though gradual — only two of 12 directors are new this year — the turnover may ultimately bring fresh viewpoints to a board that critics have contended is controlled by management at a company widely regarded as highly successful but extremely insular.
New policies might help XOM
Right now, government subsidies and the high price of oil continue to buoy XOM profits (and stock prices). But what happens when the American people finally get fed up enough to demand a drastic change in energy policy? The companies already invested in alternative energy will benefit the most. And Exxon isn’t really one of those. Instead of diversifying to alternative energy investments, Exxon has repeatedly tried to boost profits through exploration and technology to make its current operations more efficient. Diversification for Exxon has meant, for the most part, increasing its investments in natural gas.
But relying almost exclusively on fossil fuels that become ever scarcer may not be the best tactic. Can new blood in the board of directors change the direction? Perhaps. But for the good of the company (and the shareholders) such a change will have to come slowly.
After all, the Exxon business model has been working extremely well for decades, and it’s hard to argue with solid results.
Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions.
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XOM, investments, Rockefeller family
