Engine No. 1 Activist Presentation Deck
Ad hoc changes have also undercut effectiveness
of compensation plans
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Metrics are not assigned specific weights using a pre-set formula, allowing
for ad hoc changes including alteration of key compensation metrics
For example, as ExxonMobil created aggressive new growth plans in 2018,
the Board removed 'Free Cash Flow' and 'Shareholder Distributions' as
metrics, noting that such metrics could "discourage investment" and replaced
them with 'Cash Flow from Operations' and 'Asset Sales'
Likewise, the Board in 2019 gave "additional emphasis" to the Company's
"progress towards strategic objectives, which included a strong focus on the
Company's growth strategy"
• These changes were followed by heavy investment in projects that delivered
a low average return, negative FCF, increased doubt regarding ExxonMobil's
dividend sustainability, and negligible share repurchases
O
Peers - Chevron, BP, Shell, Total, ConocoPhillips, Occidental, Pioneer,
and EOG - clearly lay out a management scorecard that has well
defined weights for metrics and targets
Source: Company proxy statements.
REENERGIZE
EXXON//
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