Key Moments in Exxon’s Fight Against Engine No. 1

Behind the scenes in the battle over Exxon’s board

Exxon Mobil’s defeat by a new activist investor, Engine No. 1, at its annual meeting on Wednesday is still reverberating around Wall Street. Shareholders voting against management to install at least two new board members is seen as both a milestone for climate-focused investing and the emergence of a new force in shareholder activism. DealBook has the behind-the-scenes dish on the most important moments in the battle.

An initial meeting that didn’t go well. On Jan. 22, Exxon’s C.E.O., Darren Woods, and lead independent director, Ken Frazier, held a Zoom call with Engine No. 1 executives. During the meeting, Frazier struck a conciliatory tone — at one point, he held up a peace sign — but said the company didn’t consider Engine No. 1’s nominees to be qualified. Charlie Penner, the fund’s head of active engagement, said the company should reconsider, and insisted on all four of its candidates taking seats on Exxon’s board.

Another activist threw in the towel. In March, Exxon reached a settlement with a far bigger investor, the hedge fund D.E. Shaw, that had also been calling for changes in strategy. The company used that agreement to put pressure on Engine No. 1 to call off its fight, and Engine No. 1 briefly worried that could undercut support for its campaign from other big investors.

A last-minute pause. By Wednesday, Exxon and its advisers knew they were in danger, when preliminary vote counts before the shareholder meeting appeared to show Engine No. 1 winning at least two seats. In the middle of the meeting, the company unexpectedly called for a one-hour recess, and both sides reached out to investors. Exxon asserted it was at the behest of shareholders asking for more time to decide; supporters of Engine No. 1 worried the company was trying to convince them to change their ballots.

• In the end, many of Exxon’s top institutional investors voted in favor of Engine No. 1’s candidates, while retail shareholders tended to favor the company’s nominees. The final results — including whether the fund can claim a third director position — aren’t expected until next week, at the earliest.

Now what? Engine No. 1 may have claimed seats on Exxon’s board, but the hard part is just beginning, The Times’s Cliff Krauss and Peter Eavis note. Getting a few directors on the 12-person board doesn’t guarantee a quick or radical shift in Exxon’s business practices.

• Engine No. 1 executives said they don’t expect immediate change, but hailed their victory as a sea change. “Our overall goal is really greater transparency,” Chris James, the fund’s founder, said.

HERE’S WHAT’S HAPPENING

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