Exxon CEO Darren Woods told CNBC on Thursday the oil giant was committed to its dividend despite the fact that the company lost more than $ 20 billion in 2020 and activist investors are pushing for change.
“We will continue to give cash back to shareholders through a very high dividend,” Woods said on Squawk Box.
He noted that 2020 was “definitely the worst environment” Exxon has ever faced as the coronavirus stalled the global economy and slowed fuel demand. At one point, West Texas Intermediate’s crude oil futures fell into negative territory – an event that many had previously thought impossible.
“We had to find that balance by continuing to invest in the future and continue to pay a dividend, and we used our balance sheet to bridge these very short periods,” said Woods.
Amid last year’s challenges, Exxon cut its investment plan and reduced its workforce in order to receive the dividend. The cost-cutting measures resulted in the company continuing its payout, even though Exxon did not increase its dividend in breach of tradition.
The company’s current yield of 6.2% is among the highest in the S&P 500, making it an attractive bet for income-seeking investors.
Woods’ comments came the day after Exxon’s annual Investor Day, when the company highlighted its global portfolio, financial performance and commitment to reducing emissions through carbon capture.
In research reports after Investors Day, Wall Street companies like Evercore ISI and Bank of America said the dividend is safe.
Exxon has been under pressure from activist investors for at least December. On Monday, the company announced two new board members, including Jeff Ubben, an activist investor and ESG advocate.
The other new board member is Mike Angelakis, Chairman and CEO of Atairos and former Comcast CFO.
“We were looking for people who had experience and a successful track record of allocating capital, seeking value and opportunity, and supporting the business transition, and I think Jeff and Michael really fit that bill,” Woods told Squawk Box”.
Even so, Engine No. 1, an activist group targeting Exxon since December, said the new board changes weren’t enough. The company, which includes founders of activist hedge funds such as Partner Fund Management and Jana Partners and which has received support from California pension giant CALSTRS, has nominated its own list of four new directors.
“While ExxonMobil has now acknowledged the need for a change in its board of directors, it lacks directors with diverse track records in the energy industry who can position the company for success in a changing world,” Engine # 1 said on Wednesday.
Exxon shares rose 2.8% on Thursday morning. The stock is up 37% through Wednesday close by 2021.
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