May 27, 2015 12:53 PM
Exxon shareholders to vote on climate change, fracking
The Associated Press
DALLAS (AP) Shareholders are considering whether Exxon Mobil should put a climate-change expert on its board.
That is one of several environmental and company-governance resolutions on the agenda at the oil giant's annual meeting Wednesday in Dallas.
CEO Rex Tillerson gave a stay-the-course outlook for the company, which has seen profits decline recently with lower prices for crude oil.
Tillerson has said that oil prices will remain low over the next two years because of large global supplies and weak economic growth.
Exxon has completed more than a dozen major projects in the past three years and expects an equal number to begin production through 2017. The company is paring back on capital spending as those projects are completed from $38.5 billion last year to $34 billion this year and less in 2016 and 2017.
Shareholders were scheduled to vote on several resolutions advanced by stock owners, including one to require a company report on hydraulic fracturing or fracking, the process of using chemicals and water under high pressure to break up underground rock formations. A similar proposal has been defeated previously.
An organization of Catholic priests in Milwaukee proposed to put a climate-change expert on the board, saying that would help the company address a poor environmental image. The Exxon board opposed the resolution, saying several board members have engineering and scientific backgrounds and can handle climate issues.
Michael Crosby, the resolution's sponsor, said that Exxon is fixated on oil and gas and isn't paying enough attention to renewable energy and climate change.
"This company has to be making plans for the future," he said. "Let's get an expert on the board to deal with a critical question."
Others proposed that Exxon Mobil set goals for reducing greenhouse gas emissions from its products, such as gasoline. Vermont state treasurer Beth Pearce said institutional investors are growing more concerned about the topic, and Exxon management's strategy for diversifying its production beyond oil and gas has been "wholly inadequate."
Tillerson responded that models predicting the effects of global warming aren't very good and that it would be very hard for the world to meet aggressive emission-reduction targets. He said technology can help deal with rising sea levels or changing weather patterns "that may or may not be induced by climate change."
"Mankind has this enormous capacity to deal with adversity," Tillerson said. "I know that is an unsatisfactory answer to a lot of people."
Exxon Mobil and other oil companies have faced frequent proposals dealing with climate change and other environmental issues, and they are regularly defeated. In January, Royal Dutch Shell agreed to back a shareholder resolution requiring the company to commit to reduce emissions and invest in renewable energy.
Tillerson repeated his long-held view that renewable energy is not economical yet, adding, "We choose not to lose money on purpose." Shareholders in the hall broke into applause.
Exxon earned $32.5 billion last year, down less than 1 percent from 2013. However, oil prices fell by about half in late 2014, and Exxon's profit in the first quarter of 2015 tumbled 46 percent compared with the same period in 2014, although it still earned $4.9 billion.
Exxon Mobil shares were down 25 cents to $85.10 in midday trading Wednesday. Its shares are down 16 percent over the past year.