Exxon CEO Darren Woods emphasized the oil giant’s commitment to its dividend after the company lost more than $20 billion in 2020, and as activist investors push for change.
“We’re going to continue to return cash to shareholders through a very strong dividend,” Woods said Thursday on CNBC’s “Squawk Box.”
He noted that 2020 was “certainly the worst environment” that Exxon has ever faced as the coronavirus brought global economies to a standstill, sapping demand for fuel. At one point, West Texas Intermediate crude futures dipped into negative territory — an event that many had previously thought impossible.
“We had to strike that balance of continuing to invest for the future, continuing to pay a dividend, and we used our balance sheet to kind of draw down through these very low periods of time,” Woods said.
Amid the challenges over the last year, Exxon slashed its capital spending plan and reduced its workforce in an effort to preserve its dividend. The cost-cutting measures meant the company continued its payout, although Exxon didn’t raise its dividend in a break with 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 follow Exxon’s annual investor day, which was held virtually on Wednesday. Among other things, the company highlighted its global portfolio, financial capability and commitment to reducing emissions through carbon capture.
In research reports following the investor day, Wall Street firms including Evercore ISI and Bank of America said they believe the dividend is safe.
Exxon has faced 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 ESG proponent.
The other new board member is Mike Angelakis, chairman and chief executive officer of Atairos and former CFO of Comcast.
“We were looking for people that have experience and a successful track record in allocating capital, finding value and opportunities and helping businesses transition, and I think Jeff and Michael really fit that bill,” Woods told “Squawk Box.”
Still, Engine No. 1, an activist group that’s been targeting Exxon since December, said the new board seat changes are not enough. The firm, which includes founders from activist hedge funds including Partner Fund Management and Jana Partners and won the support of California pension giant CALSTRS, has nominated its own slate of four new directors.
“While ExxonMobil has now conceded the need for board change, what is missing are directors with diverse track records of success in the energy industry who can position the Company for success in a changing world,” Engine No. 1 said in a statement Wednesday.
Exxon shares were more than 1% higher when the market opened on Thursday. The stock is up 37% for 2021 through Wednesday’s close.
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