From the article: Here's what Matt Levine has to say: [...]
From the article:
Tiny activist investor Engine No. 1, with just a 0.02% stake and no history of activism in oil and natural gas, secured two seats on Exxon’s board in Wednesday’s vote. A third seat may yet fall into the firm’s hands when the final results are tallied. That would put Woods in the tricky position of leading a board that’s 25% under the control of outsiders. Last-minute efforts by Woods and his team to appease climate-conscious investors and rebuff Engine No. 1’s assault were to no avail.
That doesn’t exactly give Engine No. 1 control of Exxon, it doesn’t exactly put Woods’s job in jeopardy, it doesn’t exactly mean that Engine No. 1 can go implement its plans to invest in renewables and become carbon-neutral. It does give Engine No. 1’s directors seats in the boardroom, though, and power to influence Exxon’s strategy.
More important, perhaps, it shows that this can work. Shareholders — even shareholders of Exxon — can do this. If Woods and the other Exxon directors decide to ignore Engine No. 1’s plans, keep doing what they were doing, and stick their fingers in their ears and shout “I can’t hear you” whenever the Engine No. 1 nominees speak at board meetings, then next year Engine No. 1 will run a proxy fight for all of the board seats and win. Exxon’s CEO and directors have to take this shareholder vote seriously, because it proves that the shareholders are willing and able to fire them. You might think that that would be obvious — that the shareholders’ “ownership” of the corporation, and their voting rights, of course meant that they could fire officers and directors whom they didn’t like — but I don’t think it was obvious, and I think in practice it often wasn’t true. Now it is.
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What Engine No. 1 really did was give BlackRock et al. the opportunity to exercise control of Exxon; it launched a proxy fight that allowed a binding shareholder vote on Exxon’s direction. I think of this more as “Engine No. 1 gave BlackRock what it wanted” than “BlackRock gave Engine No. 1 what it wanted,” though of course both are true.
Actually it’s a little mysterious to me what’s in it for Engine No. 1? [...] it’s not obvious to me how this trade — spend $35 million on stock and $30 million on a proxy fight — makes a lot of economic sense. Maybe they just did it for the good of the planet.
Those are Exxon's numbers, not Engine No. 1's numbers. He means that, just looking at it very narrowly, Engine No. 1 didn't buy nearly enough Exxon stock to make money doing this. The bit that I...
Those are Exxon's numbers, not Engine No. 1's numbers.
He means that, just looking at it very narrowly, Engine No. 1 didn't buy nearly enough Exxon stock to make money doing this. The bit that I omitted is an estimate that, so far, they lost $9 million.
But I imagine the reputation they got from having actually pulled this off has got to be worth something, and perhaps there are other indirect ways to profit from it.
From the article:
Here's what Matt Levine has to say:
[...]
Those are Exxon's numbers, not Engine No. 1's numbers.
He means that, just looking at it very narrowly, Engine No. 1 didn't buy nearly enough Exxon stock to make money doing this. The bit that I omitted is an estimate that, so far, they lost $9 million.
But I imagine the reputation they got from having actually pulled this off has got to be worth something, and perhaps there are other indirect ways to profit from it.