3 Minutes to Read BOSTON, MASSACHUSETTS (Reuters) – According to people familiar with the figures, activist investor Engine No. 1 spent around $12.5 million to gain three board seats at Exxon Mobil Corp, less than half of its original budget, in the year’s biggest and most closely watched corporate election. A logo of Exxon Mobil Corp is shown during the Rio Oil and Gas Expo and Conference on September 24, 2018 in Rio de Janeiro, Brazil. REUTERS/File Photo/File Photo/File Photo/File Photo/File Photo/File Photo/File Photo/File Photo/File Photo/File Photo/F Exxon shareholders, dissatisfied by low returns and the president’s lack of attention to climate concerns, voted three of its four nominated directors to Exxon’s board of directors in May, shocking the oil and gas industry. The fund’s minimal budget, according to investors, might serve as a model for low-cost proxy contests. According to industry analysts, the triumph over one of America’s most renowned firms is even more amazing given Exxon’s $265 billion market capitalization. Exxon said it will spend $35 million more than usual on proxy solicitation, but it didn’t say how much more. A website, Twitter tweets, blogs, employee forums, mailings, and television appearances were all part of the effort. Exxon’s costs may have surpassed $100 million, according to industry analysts. “Our proxy contest costs are in line with our previously filed projections. We dispute any claims of exorbitant prices “On Tuesday, an Exxon spokeswoman said. Engine No. 1 did not respond to a request for comment. People familiar with the charges said Engine No. 1, which debuted in December with around $250 million in assets, focused mainly on electronic communications rather than more expensive mailings carried by post. According to a source familiar with the numbers, since the business declared its initial $40 million investment on Dec. 7, it has received a 20 percent net of fees return on the Exxon gamble through Tuesday. The investment firm also concentrated less on attracting regular investors, who are frequently predisposed to follow management, and more on persuading huge institutions to back its allegations that Exxon lacked a clear clean energy plan and underperformed on financial returns. COVID-19, according to sources, prevented both sides from flying around the world to make their case in person, lowering costs. The limits allowed Engine No. 1’s nominees to spend hours on video calls with major investors. If travel resumes and institutions insist on visiting executives and investment managers in person, investors say the technique may not be replicable. Engine No. 1 questioned the qualifications of its board candidates, including a former executive vice chairman of Marathon Petroleum Corp and the head of renewable fuels at Neste Oyj, a Finnish refiner. It also avoided going negative, which is something institutional investors abhor, according to analysts. Svea Herbst-Bayliss contributed reporting, and Richard Chang edited the piece. Continue reading
