The majority of investors of the top two oil companies in the U.S. – ExxonMobil Corporation XOM and Chevron Corporation CVX – dismissed the proposal by its minority progressive shareholders to add directors with climate change expertise to their boards. These shareholders also rejected their offer to set targets for greenhouse-gas emissions.
Per the preliminary tallies, the proposal received the support of about 20% shareholders of each company. The tallies were provided at the annual meeting of both the companies. The board at ExxonMobil has opposed the resolution. The company had stated in the filings with the U.S. Securities and Exchange Commission that it has several board members with engineering and scientific backgrounds, who are capable of handling climate issues. This, however, received a support of merely 21%.
Oil giant ExxonMobil’s profit has been impacted due to the low oil prices. Management, however, asserts that the company is capable of withstanding these oil price fluctuations and will be able to return sufficiently to the shareholders. Per ExxonMobil, the oil prices are expected to remain low over the next two years due to large global supplies and weak economic growth.
ExxonMobil is adjusting its profits by reducing costs. In the last three years, the company completed more than a dozen major projects and an equal number is anticipated to be commissioned through 2017. On completion of these projects, ExxonMobil intends to reduce its capital spending to $34 billion in 2015 from $38.5 billion in 2014. The spending is expected to lower further in 2016 and 2017.
The proposals dealing with climate change and other environmental issues have often been tackled by ExxonMobil and other oil companies. Notably, all such proposals have been rejected repeatedly.
However, a measure approved at Chevron, could provide new power to minority investors having environmental concerns. The oil companies accept the need to address climate change risks but also insist that it will take decades to develop technologies that economically capture carbon emissions.
ExxonMobil currently carries a Zacks Rank #3 (Hold). Better-ranked players from the same space include Transmontaigne Partners L.P. TLP and Pembina Pipeline Corporation PBA. All these stocks sport a Zacks Rank #1 (Strong Buy).
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