Rockefeller Kin In Exxon Mobil Shareholder Fight
(AP) May 29, 2008
Members of the Rockefeller family took a fight with Exxon Mobil Corp. public Wednesday, challenging the oil giant spawned by their namesake to split the roles of chairman and CEO and focus more on renewable energy.
The family members, who describe themselves as the company's longest continuous shareholders, said they are concerned that Irving-based Exxon Mobil is too focused on short-term gains from soaring oil prices and should do more to invest in cleaner technology for the future. Separating the leadership roles, they argue, would better position the company for challenges to come.
"They are fighting the last war and they're not seeing they're facing a new war," said Peter O'Neill, who heads the Rockefeller Family committee dealing with Exxon Mobil and is the great-great-grandson of John D. Rockefeller.
O'Neill said he had the support of more than 80 percent of family members over the age of 21. Family representatives said they were not sure how much of the company they own collectively, but that it represented a significant holding. Mutual funds and other institutional investors, not individuals, are the company's top shareholders.
"We feel tied very closely to this company, and that's why we feel so passionately about them becoming the best company they can be," said Neva Rockefeller Goodwin, an economist and family member who briefed reporters.
Exxon Mobil was formed by the combination of two offspring of John D. Rockefeller's Standard Oil Trust. It is now the world's largest publicly traded oil company.
Members of the Rockefeller family are sponsoring four proxy resolutions that raise concerns about the company's leadership under Chairman and Chief Executive Rex Tillerson. They said they have spent years behind the scenes prodding the company to change its approach to the energy business.
Exxon Mobil spokesman Gantt Walton said the company has met with members of the Rockefeller family on multiple occasions and "respects the rights of all shareholders to make their views known," but that it does not comment on details of meetings with shareholders.
Rockefeller family members that have filed or co-filed shareholder resolutions own a total of about 332,000 shares, Walton said. As of the end of last year, Exxon Mobil had 5.4 billion shares outstanding.
"While the Rockefeller family is well known, they are shareholders like any of the other 2.5 million shareholders," he said.
The family and its allies decided to take their case public, they said, because they believe future energy will come from sources other than oil and natural gas, and say the company needs to move more quickly into sustainable technology to secure its long-term viability.
"We all know the saying: The bigger they are, the harder they fall," said Connecticut State Treasurer Denise L. Nappier, who oversees a pension fund that holds $300 million in Exxon Mobil stock -- its largest single equity investment -- and spoke alongside the Rockefellers. "We are trying to keep a giant -- and it truly is a giant in the oil and gas industry -- from falling."
A shareholder vote on a slate of proposals by the Rockefellers and others is scheduled for May 28. Exxon Mobil's board is recommending shareholders vote against the proposal to split the role of chairman and CEO.
Anthony Sabino, a corporate attorney and professor of law and business at St. John's University, said calls to separate the two roles have been growing across a number of industries. While the Rockefellers themselves have limited power to sway the vote on any one proposal, he said they may nonetheless carry weight with shareholders.
"Their very recognizable celebrity name will add luster to what the other institutional investors -- mutual funds, pension funds -- have been saying, that 'hey, it's time to do this," he said.
The calls for reform came one day before Exxon Mobil was expected to report first-quarter earnings of more than $11 billion, according to a survey of analysts by Thomson Financial. Thanks to rapidly rising oil prices, that is considerably more than the company earned a year earlier, and could even top Exxon Mobil's own record for the biggest quarterly profit in U.S. history.
Light, sweet crude for June delivery rose to a record $119.93 a barrel this week and the national average price of a gallon of regular gas rose a cent to a record $3.617 Wednesday.
Exxon Mobil shares rose $1 to $92.79 in midday trading. The stock is up more than 63 percent since Tillerson became CEO on Jan. 1, 2006. The broad S&P 500 index gained 11.4 percent over the same period.
Just one day before Exxon Mobil was expected to unveil the biggest quarterly profit in US corporate history, the company's founding Rockefeller family gave warning that it was falling behind competitors in key areas of renewable technology such as wind and solar power.
The family, which still owns a substantial, but undisclosed, minority stake in the group, called for the appointment of a new independent chairman, which it said would be the best way to shake up the backward-looking senior management team.
Exxon Mobil, the world's biggest oil company, is expected to report first-quarter profits of about $12 billion (£6.05 billion) today, narrowly beating the record US quarterly profit of $11.7 billion that it set in the last quarter of 2007.
But the descendants of John D. Rockefeller, founder of the Standard Oil Company, which has become Exxon, attribute much of the group's success to the surging price of oil.
Neva Rockefeller Goodwin, John's great granddaughter, yesterday accused Exxon of “focusing on a narrow path that ignores the rapidly shifting energy landscape around the world”.
Peter O'Neill, head of the Rockefeller family committee dealing with Exxon and great, great, grandson of John, added: “Having an independent chairman leading an independent-thinking board of very experienced directors will substantially improve Exxon's ability to look the future squarely in the face and will increase its flexibility.”
An Exxon spokesman said: “We are focused on delivering the energy the world runs on today, reliably and safely and with a lower environment footprint. In addition, we are focused on R&D activity and looking for the step-change breakthrough that would improve the economics of various alternatives.”
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Those big oil companies, they’re just not doing enough to cut carbon emissions. But don’t take my word for it.
The Rockefeller family have a bone to pick with Exxon Mobil, the company that grew out of their ancestor’s oil giant Standard Oil, over its failure to give greater backing to alternative energy. “They are fighting the last war and they're not seeing they’re facing a new war,” says Peter O’Neill, great-great-grandson of John D. Rockefeller (Chicago Tribune).
Although the Rockefellers don’t own a huge amount of Exxon, their attack is likely to cause some embarrassment to the company, given the weight that still attaches to their name. Again though, don’t take my word for it.
“Clearly this has more impact than coming from a corporate activist who owns five shares,” says Buie Seawell, chairman of the department of business ethics and legal studies at the University of Denver’s Daniels College of Business (Denver Post). “The name gives a lot of credibility to what they’re doing, and it’s significant that the family has a historic equity stake.”
Slate has a thoughtful piece on the Rockefellers’ stance, noting:
...the Rockefellers, of all families, should know that Exxon Mobil is unlikely to have much success ushering in a new energy paradigm that will change the world for the better. Virtually all the good works conducted by John D. Rockefeller, and by his descendants, have been done by the nonprofit foundations and philanthropic institutions he created, not by the efficiency-seeking, for-profit machine he built. What’s more, a company that depends on an established technology rarely has the incentives or ability to lead a shift to the technology that will upend the old way.
Perhaps the best part of this story is the revisionism that paints John D. as a pioneer of alternative energy. Neva Rockefeller Goodwin says “Kerosene was the alternative energy of that day, when my great grandfather realised it could replace whale oil. Part of his genius was in recognising early on the need and opportunity for a transition to a better, cheaper, cleaner fuel” (6:20 in on this audio clip).
Also in the news today: unhappiness with another big oil company. Shell has pulled out of the London Array, ‘the world’s largest offshore wind farm’, which it was supposed to be building off the British coast along with fellow energy companies E.ON and Dong Energy.
“I believe that at the very least, some delay to the project is now inevitable,” says Paul Golby, the chief executive of E.ON UK (Times, Guardian, Daily Mail). “While we remain committed to the scheme, Shell has introduced a new element of risk into the project which will need to be assessed.”
Shell is trying to sell its one third stake in the London Array. It is currently unclear who might be willing to buy it.
Image top: oil well and wind farm / US DoE
Image lower: John D.Rockefeller aged 18 / via Wikimedia
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