Exxon’s CEO, Darren Woods, emphasized the oil giant’s commitment to its dividends after the company lost more than $ 20 billion in 2020, and while activist investors are pushing for change.
“We will continue to return money to shareholders through very strong dividends,” Woods said on Thursday on CNBC’s “Squawk Box” program.
He noted that 2020 was “certainly the worst environment” that Exxon ever faced when the coronavirus paralyzed global economies, undermining fuel demand. At one point, West Texas Intermediate crude futures plunged into negative territory – an event that many previously considered impossible.
“We had to find the balance to continue investing in the future, continuing to pay dividends, and we used our balance sheet to cash out during these very short periods of time,” said Woods.
Amid last year’s challenges, Exxon cut its capital spending plan and reduced its workforce in an effort to preserve its dividends. The cost-cutting measures meant that the company continued with its payments, although Exxon did not increase its dividends in breach of tradition.
The company’s current 6.2% yield is among the highest in the S&P 500, making it an attractive bet for investors looking for income.
Woods’ comments follow Exxon’s annual investor day, which took place virtually on Wednesday. Among other things, the company highlighted its global portfolio, financial capacity and commitment to reducing emissions through carbon capture.
In research reports after the investor’s day, Wall Street companies, including Evercore ISI and Bank of America, said they believed the dividend was safe.
Exxon has been under pressure from activist investors since at least December, and on Monday the company announced two new board members, including Jeff Ubben, an activist investor and proponent of ESG.
The other new board member is Mike Angelakis, president and CEO of Atairos and former CFO of Comcast.
“We were looking for people with experience and a track record of successfully allocating capital, finding value and opportunities and helping with the business transition, and I think Jeff and Michael really fit that account,” Woods told Squawk Box.
Still, Engine No. 1, an activist group that has been targeting Exxon since December, said the new board seat changes are not enough. The company, which includes founders of activist hedge funds, including Partner Fund Management and Jana Partners, and won support from California pension giant CALSTRS, has indicated its own list of four new directors.
“Although ExxonMobil has now admitted the need for change in the board, what is missing are directors with diverse success stories in the energy industry who can position the company for success in a changing world,” said Engine No. 1 in a statement on Wednesday.
Exxon’s shares were more than 1% higher when the market opened on Thursday. The shares are up 37% for 2021 until the close of Wednesday.
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