• Exxon Mobil (NYSE:XOM) is facing the threat of a proxy fight from Chris James, a hedge fund veteran turned activist investor, whose new firm is going after four of Exxon's 10 board seats.
• According to the WSJ, Engine No. 1 LLC is preparing to send a letter to the board, urging a greater focus on investments in clean energy while cutting costs elsewhere to preserve its dividend. XOM shares are down 40% so far this year.
• Engine No. 1 has the support of California State Teachers’ Retirement System and expects other shareholders to be sympathetic to the cause, given widespread frustration over Exxon’s stock performance. Calstrs holds a more than $300M Exxon stake, while Engine No. 1 has one worth around $40M.
• Key to the outcome will be the reaction from larger shareholders, especially Vanguard Group, BlackRock (NYSE:BLK) and State Street (NYSE:STT), which together control nearly 20% of Exxon’s shares. BlackRock and State Street are also part of Climate Action 100+, an investor group that pushes for companies to take swifter action to combat climate change.
• Some history: James has invested in the technology sector for almost three decades. He previously co-founded Andor Capital Management, which was once one of the largest tech hedge funds, and last year he stepped away from managing client money at the group he founded in 2004, Partner Fund Management, to focus on impact investing. The team at Engine 1 includes Charlie Penner, a former partner at activist hedge fund Jana Partners, where he helped run campaigns at companies including Whole Foods Market.