Exxon’s Exodus: Employees Have Finally Had Enough of Its Toxic Culture

Source: By Kevin Crowley, Bloomberg • Posted: Sunday, October 16, 2022

The 140-year-old oil company is making more money than ever. Yet the pandemic exposed deep cultural problems—and talent is fleeing.

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Illustration: Saratta Chuengsatiansup for Bloomberg Businessweek

Shortly after Exxon Mobil Corp. lost its battle with an activist investor last year, an executive named Bill Keillor decided to give his department a morale boost. It had been a difficult year and a half for Exxon employees. Covid-19 and plunging crude prices had led to halted salary increases, reduced benefits, and, for the first time in decades, thousands of layoffs. Anxiety was coursing through the organization.

So Keillor, whose title is global IT vice president, and his leadership team organized an awards ceremony to take place at Exxon’s Houston campus. They posted an invite on Yammer, an internal social network, with Keillor’s face cropped onto a tuxedo. With many employees still working remotely, most tuned in via Zoom.

Keillor started by thanking everyone for their hard work over the past year, presented awards to three top-performing teams, and then opened the floor to questions. It was at this point things started to unravel, according to four people present who spoke on condition of anonymity. The software developers, data analysts, and technicians who run Exxon’s vast computing network, which helps the company manage everything from drilling wells to pipeline flows, were in no mood to celebrate. Emboldened by the virtual format, they began firing off tough questions. They wanted to know if there would be more layoffs, whether remote working would continue after the pandemic, and whether Exxon was willing to raise pay to the level of major tech companies.

To an outside observer, the scene might have appeared like a slightly tense version of your average corporate town hall. But within Exxon, famous for its top-down, buttoned-up, authoritarian culture, where employees rarely challenge their superiors, and certainly not in an open forum, the moment had the strong whiff of rebellion. As Keillor bristled, other managers stepped in to take some questions, deflecting attention from the boss. But eventually, Keillor had had enough and snapped.

If you want to be a “hotshot” and triple your pay working for Amazon, then go right ahead, the people recall him saying. “Good luck to you.”

Rather than be humbled by the scolding, staffers began circulating memes mocking the event in private chat groups, which rapidly spread across the company. One depicted a long-term career at Exxon as a car hurtling off a highway. Another compared the awards ceremony to a piece of tape used to patch a leaking barrel of water. Others suggested it was about time employees take Keillor up on his advice and quit.

relates to Exxon’s Exodus: Employees Have Finally Had Enough of Its Toxic Culture
Exxon founder John D. Rockefeller circa 1930. Photo: CSU Archives/Everett Collection

A year and a half later, even as its stock surges again and Exxon makes more money than it has in its 140-year history, the company has experienced the highest attrition since its merger with Mobil in 1999. Of the 12,000 departures globally in the past two years, less than half were from layoffs. “Like nearly every company, attrition increased in the last two years, but we don’t see that as a long-term trend,” Exxon said in a statement. “Importantly, we are seeing good results when hiring top talent for roles throughout the company, at entry-level and for senior executive positions.”

But a Bloomberg Businessweek investigation involving interviews with more than 40 current and former employees (many of whom requested anonymity because Exxon hasn’t authorized them to speak publicly), as well as reviews of dozens of internal documents, reveals one overriding reason talent is fleeing: a culture that’s increasingly out of step with the world around it. Those interviewed describe an organization trapped in amber, whose insular and fear-based culture—once a beacon of corporate America—has become a drag on innovation, risk taking, and career satisfaction. Although many expressed pride at working for an industry leader, they were also frustrated by how slow it was to invest in some of the energy industry’s biggest breakthroughs over the past decade, including shale oil and low-carbon technologies, making it a place where the best and brightest no longer want to spend their best years. “I was bored at my job,” says Avery Smith, who earned more than $100,000 a year as a data scientist right after graduating from college and quit last year, echoing what many other former employees told Businessweek. “I was pretty fed up with not innovating.”

Exxon’s performance ranking system, which pits employees against each other, dominates the day to day. Subordinates are told not to speak out against their bosses in meetings for fear of being placed at the bottom of the rank and pushed out. Employees are reluctant to raise problems or speak freely about environmental issues. Senior managers too often promote people who look and sound like themselves at the expense of technical experts willing to deliver hard messages, and some employees of color say they’ve been marginalized. “Agreeability to senior leadership has become more important than capability,” says one executive who left the company last year after two decades. “Unfortunately this accelerated during the pandemic.”

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Former Exxon mechanical engineer Dar-Lon Chang in Arvada, Colo. Photographer: Eli Imadali for Bloomberg Businessweek

Exxon spokesperson Amy von Walter rejects those characterizations. “The idea that ExxonMobil’s culture is what these employees say it is doesn’t hold water for two reasons: how many people join this company each year and how long people stay,” she wrote in an email. “No culture is perfect and it’s far too easy to take a few data points and paint with a broad brush, but that doesn’t produce an accurate portrait.” (In response to the Keillor episode, von Walter says Exxon encourages candid workplace conversations, “although we may not get it right every time.”)

But CultureX, an organization out of MIT that evaluates corporate culture based on Glassdoor reviews, says these problems run so deep that Exxon now ranks below industry benchmarks for 143 of the 196 cultural issues it measures. According to CultureX co-founder Charlie Sull, innovation, collaboration, and psychological safety fell far below those of oil industry competitors, whereas pay and benefits ranked above average. Exxon, he says, appears to be using remuneration and perks “to compensate for a culture that faces significant challenges with toxicity.”

Exxon, which traces its roots to John D. Rockefeller’s Standard Oil, is used to being public enemy No. 1. It’s incurred the wrath of politicians and civil society for being too powerful, too profitable, and too polluting. But rarely has it suffered such discontent within its own ranks. “Upper management doesn’t like to hear bad news, so to stay at Exxon long term, you have to drink the Kool-Aid,” says Dar-Lon Chang, a mechanical engineer who left the company in 2019 after more than a decade. “This doesn’t sit well with younger people and especially those concerned about the climate crisis.”

Since losing the campaign to Engine No. 1, a tiny activist investor firm, Exxon has reformed its climate strategy. Under Chief Executive Officer Darren Woods, it’s pledged more ambitious emissions reduction targets, increased spending on clean energy, and elevated its low-carbon division to the top of the corporation. It’s even made a series of rare external hires including Chief Financial Officer Kathy Mikells from Diageo Plc and low-carbon head Dan Ammann, who previously ran General Motors Co.’s autonomous vehicle startup. It’s condensed 11 businesses into three and is on track to cut costs by $9 billion by 2023.

By financial standards, Woods’s plan is working. The stock is up 60% this year, ahead of its major peers, and closing in on a record high. But if Exxon has any shot at dominating the volatile energy transition over the next century, it will need to attract and hold on to the next generation of scientists, engineers, and technologists. “We can talk all day about low carbon,” says one recently departed Exxon executive. “But first we’ve got to decarbonize the culture.”

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Exxon’s largest campus, located in Spring, Texas, was built during the Rex Tillerson era and features a 10,000-ton glass cube. Photographer: Ernest Scheyder/Reuters

Soon after Rex Tillerson became CEO of Exxon in 2006, he decided to build an office complex in Texas to match its newfound status as the biggest company in the US. Tillerson and his executives would remain in Exxon’s “God Pod,” a nickname for the headquarters in suburban Dallas. But about four hours away, the new Houston campus would become the company’s largest hub, accommodating more than 10,000 people.

Tillerson spared no expense, and little did he need to. As the world melted down from the financial crisis, Exxon made $45 billion in a single year, then the biggest profit of any company in US history. The campus would have two lakes; its low-rise, glass-walled buildings would house a food court and child-care facilities. The piece de resistance was a 10,000-ton cube that appears to hover over a plaza below, built to show off Exxon’s engineering prowess.

According to interviews, construction planners decided to move an almost 100-foot oak tree, estimated to be more than a century old, from a nearby forest to a courtyard within the campus. Much loved by Tillerson, the tree was meant as a symbol of the company’s reverence for the surrounding landscape and the environment. Exxon worked with world-renowned arborists, digging up the tree and its root system, loading it onto a heavy-duty trailer, and eventually moving it to its new home in a process that took almost a month. Once the tree was in place, contractors even installed a custom-built irrigation system.

It was a monumental task, but it wasn’t beyond the power of Exxon, a corporation that holds unique importance in the history of corporate America. Few companies exist for more than a century, let alone dominate their industry over that timespan. In 2011, exactly 100 years after the US government broke up Standard Oil, Exxon was once again the biggest company in the S&P 500. Not only did it embody American capitalism through the 20th century, but it also literally fueled it, ensuring steady supplies of oil, gasoline, and chemicals through two world wars, the midcentury consumer boom, and the rise of OPEC.

relates to Exxon’s Exodus: Employees Have Finally Had Enough of Its Toxic Culture

Tillerson at a press conference in 2008.Photographer: Matt Nager

Exxon’s modern culture began with Lee Raymond, a chemical engineer who became CEO in the early 1990s. He earned the nickname “Iron Ass” for his acerbic tongue, uncompromising demands, and public reprimands of senior managers, according to Private Empire: ExxonMobil and American Power by Steve Coll. The typical Exxon man—and Exxon’s workforce is two-thirds male—“is not an eccentric, a maverick, or an entrepreneurial type,” read a Texas Monthly articlefrom 1978. “He’s not a flashy or sloppy dresser. He’s bright, aggressive, good with numbers, less good with people.” The same is still largely true today among Exxon’s higher ranks. An average career length is about three decades, and no outsider had been hired into the modern Exxon’s inner sanctum of top executives until last year.

Engineering is Exxon’s lifeblood. Its top recruiting grounds are mainly state schools with prestigious engineering programs—Texas A&M, Georgia Tech—rather than the Ivy League. Salaries could start at $100,000, and benefits include a traditional pension, a relic in corporate America. A graduate joining Exxon could easily travel and relocate almost anywhere in the world. Engineers in their 20s could find themselves working on refinery upgrades along the Gulf Coast or deep-water drilling in Brazil or liquefied natural gas in Qatar. By their mid-30s they could be involved in developing major projects, and by their 40s they could be earmarked as a future executive, formally assisting a vice president in the God Pod. By age 55, even if they’d risen only to middle management, that pension would kick in, enabling a comfortable early retirement.

Exxon’s inward-looking culture had its upsides. It made the company self-reliant, independent of government in a way few of its competitors can match, and its indifference to the whims of Wall Street allowed executives to plan for the long term. It bred strong bonds between peers, and several of the employees Businessweek interviewed said couples both working at the company were common. “The best part of the company was the people,” says Bernie Pafford, a chemicals specialist who retired in 2018 after 42 years. “Not necessarily the management, but the people.”

But ascending through Exxon with technical acumen and smarts has never been enough. Successful recruits must follow rules and work within a hierarchy. Acronyms guide much of daily life. The OIMS, or Operations Integrity Management System, governs existing operations including production sites and refineries; new projects are developed through EMCAPS, or ExxonMobil Capital Projects Management System. Safety procedures are sacrosanct. A rule requiring employees to hold the handrail while walking on stairs, primarily to avoid falls at dangerous sites such as offshore platforms or chemical plants, is rigorously enforced even in offices. License-plate-reading traffic cameras on Houston office grounds can enforce a strict 25-mph speed limit. Employees are prohibited from talking on the phone while driving, even if doing so legally, hands-free.

Within any major oil company, career advancement often lies in getting a project approved, which takes years. Persuading executives to commit billions of dollars to a project can catapult employees to the executive track, but it also has the potential to skew incentives. A 2020 internal Exxon study on “runaway projects”that exceeded early cost estimates by more than 70% suggested that they were “intentionally underestimated” during planning so they could get greenlighted. When projects inevitably suffered delays, individual teams would desperately try to get their parts of it back on track at the expense of the overall goal. “These actions created a negative feedback loop where the recovery action made matters worse,” the study said, without specifying whether it was Exxon employees or the other companies that invested in the project that were at fault. (Exxon says most of the overspending was because of projects in which it was a junior partner with no operational control.)

These tendencies exacerbated Exxon’s growing costs and bureaucracy, which started to erode returns in the late 2010s. Big strategic moves from early in Tillerson’s tenure as CEO failed to pay off. In 2010, Exxon spent $31 billion on XTO Energy Inc., a shale gas producer, right before natural gas prices plunged. The company was searching for crude overseas while smaller rivals discovered how to economically produce shale oil in the US. A deal struck with President Vladimir Putin to explore the Russian Arctic was locked behind sanctions.

Pressure was also growing on climate. In 2015, Inside Climate News published a series of documents that appeared to show Exxon scientists knew about the global warming dangers of burning fossil fuels in the 1970s, and the company embarked on a public-relations campaign to downplay the issue. Tillerson denied any suggestion that Exxon misled the public.

When current CEO Woods, another Exxon lifer, replaced Tillerson in 2017, it was clear the company was falling behind. To help return it to its former glory, Woods formulated an aggressive $200 billion expansion plan at a time when many rivals were pulling back on spending and pivoting to low carbon. But by the end of 2018, Exxon’s stock performance was lagging. Shares had returned a miserable 1.4% annually over the previous decade, including dividends, and Exxon’s debt almost tripled, to $20 billion, in the same time frame.

Around this time it became clear that “Rex’s Tree” was also struggling. Its canopy grew thinner, and it lost branches year after year. Lightning struck it at least once. Far from being the imposing salute to nature Exxon had intended, employees joked that it looked like the Giving Tree in the allegorical tale by Shel Silverstein, in which an apple tree sheds parts of itself to its owner.

Eventually, around Memorial Day in 2021, the grand old oak was completely removed while most employees were out of the office. A memo went around the following morning explaining that despite its outward appearance, it was dying inside.

When Exxon rolled out a new version of its performance review process just as lockdowns hit in early 2020, the goal was to make it more transparent and constructive. “Talking to colleagues, I don’t think they’ve always got clear, actionable feedback from supervisors in the past,” says Rohan Davis, who manages Exxon’s biggest North American refinery and was handpicked by the company’s media department to speak with Businessweek. This “was a deliberate effort to try and make sure that all supervisors are giving clearer feedback that’s actionable.”

The company’s long-standing performance review process was a remnant of the “rank and yank” system, a blunt management tool originated by General Electric Co. CEO Jack Welch in the 1980s. Over the past decade companies including Microsoft, Goldman Sachs Group, and even GE have abandoned it because, even for their cutthroat cultures, the system became too severe.

Exxon’s new process included three major changes. First, instead of placing employees on a 1-to-100 bell curve, they were put in performance categories. Those in the lowest category would have to choose between a formal performance improvement plan or severance. Next, managers were ordered to put 8% of their reports in the bottom category, about 5 percentage points more than in prior years, when the decision wasn’t a hard requirement and was left to managers’ discretion. Finally, the old system had limited how much people could move up or down the ranking, a crucial guardrail that gave them time to adapt to a new assignment or insulated them from a bad supervisor. Now employees could rise to the top or fall to the bottom in a single year. “The fact is, at any company, people will be evaluated, and well-run companies will ask bottom performers to leave,” says Exxon spokesperson von Walter. Pam Heatherington, a senior corporate adviser also chosen by the company to speak with Businessweek, says it’s not something to be fearful of. “The system was designed to allow people to succeed and encourage alignment of the expectations of the organization with leadership.”

The performance review system had been a source of anxiety long before the latest changes. More than two dozen current and former employees interviewed said concerns about ranking make it hard to deliver bad news to their bosses or admit mistakes, let alone express views about climate change that deviate from the company line. “Even a small mistake will drop you down the ranks, so you don’t want to rock the boat,” says one employee who quit in 2021. Chang, who joined Exxon in 2003 after getting a doctorate in mechanical engineering and who worked in Exxon research, says early on in his career he was brought in to give technical advice on a new project and spotted a potential problem, but a supervisor didn’t want to report it up the chain of command. Chang ended up using a formal reporting avenue to elevate his concerns and eventually got a hearing with the vice president of engineering, but by that point he’d already been taken off the project and dropped in the performance ranking. “My peers knew I was being punished,” he says.

More recently, three whistleblower complaints, reported by Businessweek for the first time, were filed against a senior executive accusing him of bumping up the rank of an employee with whom he was having a sexual relationship in June 2020. By pushing the favored employee to the top of the ranking, dozens, if not hundreds, of other employees may have had to be bumped down because of “the zero-sum competition that is ExxonMobil’s performance assessment process,” said one of the complaints, which was sent to Woods and four members of the board on Feb. 7 of this year. The executive retired in 2021, according to his LinkedIn profile, and he didn’t respond to a request for comment. (“It would be inappropriate for me to comment on individual employees, but this complaint was reported, investigated, and resolved,” Exxon spokesperson Von Walter says.)

relates to Exxon’s Exodus: Employees Have Finally Had Enough of Its Toxic Culture

Woods at a meeting in Beijing in 2018. Photographer: Mark Schiefelbein/AP Photo

The timing of the new amped-up system couldn’t have been more unsettling for employees suddenly marooned at home. Exxon had been through booms and busts before, but it was clear the pandemic was different. In previous downturns, refining and chemicals would help prop up Exxon’s earnings when oil prices dropped, and vice versa. Now everything was flashing red. People stopped driving and flying, and an oil supply battle between Saudi Arabia and Russia erupted, sending crude prices plummeting. Employees began fretting in online chat groups that job cuts could be coming, and supervisors spent hours on Zoom calls agonizing over which team members would be pushed to the bottom performance category. Teamwork was eroding as people became more fearful and competitive in an already fearful and competitive environment.

As 2020 wore on, Exxon suspended its 401(k) match and expats returned to the US. In June, about nine months before vaccines became widely available, managers began requesting that employees return to the Houston campus once safety protocols were in place and encouraged them to come up with creative ideas for how the company could save money. One idea was to reduce water usage by shortening sprinkler times on campus grounds. Another was to downgrade the coffee. Some noticed that recycling bins were removed from their desks.

But those ideas were minor compared with one cost-saving initiative that continued to gain traction: offshoring. Like many American corporations, Exxon had been expanding service centers in Asia for some years, but it accelerated in 2020. Employees were asked to move any tasks they could to Bangalore or Kuala Lumpur, often having to personally train people they feared would ultimately replace them. By that fall, their fears were realized when Woods announced that Exxon would be laying off 15% of its global workforce, slashing its capital budget by about a third, or $10 billion, and freezing regular salary increases.

One thing Woods didn’t cut was Exxon’s dividend, which is the third-largest in the S&P 500 and costs $15 billion a year. Employees recall the justification as basically this: A large portion of Exxon’s shareholder base comprised retail investors who relied on the dividend for income. “There might be many good business reasons to keep it, but don’t pretend to care about Grandma and her dividend when you’ve just fired thousands of employees,” says one former employee who quit in 2021 after more than a decade at Exxon.

That sentiment only hardened when, weeks after the layoffs were announced, Exxon awarded five executives including Woods more than a half-million restricted stock units, collectively worth $23 million then and more than double that today. “It really upset a lot of people,” the former employee says. “It made it into an ‘us vs. them.’ ”

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Avery Smith, who quit his job as an Exxon data scientist last year, at home in Lindon, Utah. Photographer: Niki Chan Wylie for Bloomberg Businessweek

By early 2021, the calculus for many US employees working for Exxon was beginning to change. “Pretty much everyone I know [at Exxon] was looking for a Plan B,” says Smith, the data scientist who resigned in January 2021. “And a lot of people found that Plan B was better than Plan A.”

As an intern just out of college, Smith had worked on exciting projects, but when he joined full time in 2019, he realized many of them would never see the light of day. Work became stale and repetitive, and when budgets were cut in 2020, he was left with little meaningful work to do. Smith also wanted to work remotely, which his boss refused. Office-based employees can negotiate work-from-home arrangements with their managers, but many feel pressure to be in the office for fear of being dropped down in the annual ranking. So Smith quit and started his own data science business.

Some employees saw training programs offered by the company as their ticket out. One popular course instructed people on how to use Microsoft Azure, a cloud computing platform, and provided an online certificate that could be posted on social media. It became a running joke that anyone who posted an Azure certificate on their LinkedIn profile would be the next to leave. Some even left to join Microsoft Corp. itself.

Amazon.com Inc. also became a major recruiter of Exxon employees in 2021, hiring not only IT staff but also engineers to work in its warehouses and logistics hubs. Talent left to join Bain, Boston Consulting Group, McKinsey, and other consulting companies, drawn to these firms’ strategic and technical abilities. Some went to clean energy startups, and geologists and engineers even took pay cuts at their new jobs merely to get out.

By the end of 2021, Exxon’s attrition rate in the US was 18%, about the same as the nationwide average but almost double the average of its peers including BP, Chevron, and Shell, according to Revelio Labs, a workforce intelligence company that tracks data from public employment records. Exxon disagrees with the analysis and says its attrition is in line with peers’.

Resignation letters and internal emails began circulating, revealing a pent-up frustration particularly among employees who weren’t White, straight, and male. Exxon “enables systemic unconscious and conscious biases” against minorities, a Black employee who worked at the company for 12 years emailed to 300 people, including executives, on his last day. In the 3,000-word message, he said that over a decade he was lied to about his ranking, passed over for promotions, and frequently given jobs outside of his stated preference. Early in his career, he said, he suffered racist comments from colleagues, and for one role he was told to use his personal car to drive 1,000 miles a week while both his predecessor and successor were given Exxon fleet vehicles. “I felt lost, forgotten, and alone,” he wrote.

In 2020, Exxon’s Black Employee Success Team, an internal resource group led by Black workers, surveyed its members and found “threats to psychological safety in the work environment including micro-aggressions, feeling the need to work 10x harder than non-Black counterparts including increased scrutiny and monitoring of work output,” according to the letter. Several current and former minority employees interviewed said they felt the need to “code-switch” in front of their mainly White managers. One Black employee recalled being told to improve how he dressed and styled his hair if he wanted to get promoted.

A Black female engineer, who at one point appeared on publicity materials touting the company’s diversity commitments, said her nine years with Exxon turned into a “dysfunctional, mentally abusive relationship.” For her, Exxon revealed its true colors in its belated response to the murder of George Floyd. “I watched so many companies stand up in support of their Black employees while anxiously waiting months for my own company to openly show their support for people who look like me,” she said in her resignation letter. Then, in April, Exxon updated its policy on what flags could be flown on its main corporate flagpoles, banning “external position flags” such as Pride and Black Lives Matter. Exxon’s Houston Pride group, which represents LGBTQ employees and their allies, had previously flown the rainbow flag with the company logo only the year before and was outraged at the new policy. Members of the Black employees’ group were alarmed, particularly because they had never flown nor even suggested flying the Black Lives Matter flag, yet they were still singled out. For the engineer it was the final straw. “I did all this external community work, all the while knowing internally, within this company, I was being systematically marginalized as a person for the parts that make me whole: disabled, queer, and Black,” she says. She quit in July.

Exxon declined to comment on allegations from both of these Black former employees, but it said that diversity is “embedded in our core values” and that the company hires female and US minority employees “at or above availability in the market.”

Exxon’s failure to throw its weight behind the energy transition became another factor driving away talent. Graduates who began working for Exxon within the past 15 years typically had greater concerns about climate change than employees of prior generations. Many said Exxon recruiters even pitched the company as a leader in clean technologies such as algae biofuels and carbon capture. Mechanical engineer Chang says he initially joined Exxon in 2003 believing it would play a critical role in weaning the world off fossil fuels, but over a 16-year career it became increasingly clear that management was focused on “doubling down, even quadrupling down, on oil and gas.” He watched Exxon reject investments in renewables, saying they wouldn’t meet a minimum profit requirement, but then press ahead with oil and gas projects that would struggle to hit the same target. “If people wanted to talk about climate change or the direction of the company, they feared they would be punished,” Chang says.

That’s exactly what Enrique Rosero, a geoscientist who worked for Exxon for almost 11 years, says happened to him. At a 2020 town hall in Houston, he challenged senior executives on whether Exxon’s reluctance to cut emissions and invest in low-carbon energy was less an issue of not having the right technologies, as the company had long claimed, and more of a leadership problem. On internal message boards he also questioned whether Exxon would have to write down some of its oil and gas assets if the world moved toward zero carbon. Rosero, whose job was to help quantify new oil reserves, says he suffered “retaliation” through the performance review process. Within months of the town hall, managers dropped him into the bottom category. Rosero resigned.

Exxon spokesperson von Walter says, “The claims by two former employees [Chang and Rosero] are simply false.”

Decades before Exxon came under attack in Congress last year for sowing doubts about climate science, its researchers were among the first to analyze the impact of carbon on global warming. It pioneered work on solar panels and the conversion of coal to liquid fuels, and even had a nuclear power business. The lithium-ion battery, now a staple in computers, electric vehicles, and phones, was invented in an Exxon laboratory. With more than $50 billion in profit expected this year—more than Amazon, Procter & Gamble, and Tesla combined—Exxon has the means to finally make a monumental shift toward building a low-carbon future.

Since Engine No. 1’s activist campaign, there are signs that Exxon’s energy business is becoming competitive again. Its investments during the pandemic are now boosting oil and gas production, which without inflation would be even higher. But the energy industry is moving fast. In the US, President Joe Biden recently passed the most sweeping clean energy reforms in history. Europe’s desire to move away from fossil fuels has only intensified since Russia curtailed gas flows. Electric vehicles and renewable power sources are entering the mainstream.

“There’s no guarantee that Exxon Mobil will be here in 2050” if it doesn’t adapt quickly, says Witold Henisz, a professor of management at the University of Pennsylvania’s Wharton School. “Exxon has some of the greatest scientific minds. They understand climate science, and they want their company to do much more,” he says. But its resistance internally is “increasingly causing strain.”

Now Exxon finds itself waking up to a talent war most other companies have been fighting for years. “We cannot find better or equally good people in the market compared to those we are losing,” a manager in Houston emailed to Exxon’s global services division president in April. “We’re doing what we can, where we can, but many things that the employees really care about we ultimately have no control or influence over as leaders—leaving us helpless. It seems the system has/is failing us.”

That same month, Woods led an investor conference call appearing particularly relaxed. Energy markets were convulsing after Russia had invaded Ukraine. Oil prices were higher than $100 a barrel, and natural gas prices had soared, too. His cost-cutting meant Exxon easily translated those gains to the bottom line and a few months later would help earn the company $17.9 billion in a single quarter, its most profitable ever.

He told investors the tough decisions and bold actions taken over the past few years “positioned us to take advantage of market improvements,” and it wasn’t only shareholders who would reap the rewards. He would invest in Exxon’s people and culture to “continue to attract and retain the best talent in the industry.” The same morning, US employees got a memo revealing just how far Woods was willing to go: Exxon would increase the pool of high performers eligible for stock grants and give everyone a one-time 3% pay bump.

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