Exxon CEO Darren Woods told CNBC on Thursday that the oil giant is committed to its dividend, even though the company lost more than $ 20 billion in 2020 and as activist investors are pushing for change.
“We are going to continue to give cash back to shareholders through a very strong dividend,” Woods said on ‘Squawk Box’.
He noted that 2020 was ‘definitely the worst environment’ that Exxon has ever encountered when the coronavirus brought global economies to a standstill, weakening fuel demand. At one point, West Texas Intermediate plunged crude futures into a negative territory – an event that many previously thought impossible.
“We had to take up the balance sheet to continue investing for the future, to pay a dividend, and we used our balance sheet to extract these very low periods,” Woods said.
Amid the challenges of the past year, Exxon has cut back on its capital expenditure plan and reduced its workforce, in an effort to maintain its dividend. The austerity measures meant the company continued its payout, although Exxon did not increase its dividend in a breach of tradition.
The company’s current return of 6.2% is among the highest in the S&P 500, making it an attractive bet for investors with income.
Woods’ comments come a day after Exxon’s annual investor day, where the company highlighted its global portfolio, financial capability and commitment to reducing carbon capture emissions.
In post-investor research reports, Wall Street firms, including Evercore ISI and Bank of America, said they believed the dividend was safe.
Exxon has been under activist investors since at least December, and on Monday the company announced two new board members, including Jeff Ubben, an activist investor and ESG supporter.
The other new board member is Mike Angelakis, chairman and CEO of Atairos and former chief financial officer of Comcast.
“We were looking for people with experience and a successful track record in allocating capital, finding value and opportunities, and helping businesses change, and I think Jeff and Michael really fit the bill,” Woods said. told Squawk Box.
Engine no. 1, an activist group targeting Exxon since December, said the new board changes were not enough. The firm, which includes founders of activist hedge funds such as Partner Fund Management and Jana Partners, and has won the support of California pension giant CALSTRS, has named its own lead of four new directors.
“While ExxonMobil has now conceded to the need for board change, there are directors with diverse records of success in the energy industry who can position the company for success in a changing world,” said Engine No. 1 Wednesday said.
Exxon shares rose 2.8% on Thursday morning. The share will rise by 20% for 2021 until the close of Wednesday.
Disclosure: CNBC is owned by Comcast’s NBCUniversal Unit.
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