Little Engine No. 1 beat Exxon Mobil with only $12.5 million

Author: Svea Herbst-Bayliss

Boston (Reuters)-activist investor Engine No. 1 spent approximately $12.5 million to win three board seats Exxon Mobil People familiar with the matter said that Corp (NYSE:) participated in the largest and most watched corporate competition this year for less than half of its original budget.

In May, the No. 1 engine shocked the oil and gas industry. At that time, ExxonMobil shareholders were frustrated by weak returns and the US leadership’s lack of attention to climate issues and elected three of its four nominated directors into Exxon. Sam Mobil Board of Directors. Investors said that the small budget of the fund may become a template for low-cost agency competition.

Industry analysts said that considering Exxon Mobil’s $265 billion market valuation, the victory over one of the most iconic companies in the United States is even more impressive.

ExxonMobil has stated that it plans to spend $35 million more than the usual agency bidding fees, but did not specify the figure. Its activities include a website, Twitter posts, blogs and employee forums, emails and TV shows. Industry experts speculate that ExxonMobil’s cost may exceed $100 million.

An ExxonMobil spokesperson said on Tuesday: “Our agency competition costs are consistent with the estimates we submitted. We reject any speculation that the costs are too high.”

Engine One declined to comment.

According to people familiar with the matter, the No. 1 engine launched in December has approximately $250 million in assets and is mainly focused on electronic communications rather than sending more expensive mail by post. A person familiar with the matter said that since the company disclosed its initial $40 million investment on December 7, as of Tuesday, it has received a 20% return on ExxonMobil’s bet, deducting expenses.

The investment company is also more focused on persuading large institutions to support its criticisms of Exxon Mobil’s lack of a convincing clean energy strategy and lagging financial returns, and less attention to attracting retail investors, which tend to favor retail investors. To support the management.

People familiar with the matter said that COVID-19 prevented both parties from flying to other parts of the world to testify in person, which helped reduce costs. For Engine 1, these restrictions allow its nominees to have hours of video calls with large investors.

Investors said that if travel resumes and institutions insist on meeting with executives and investment managers in person, the strategy may not be able to replicate.

Engine No. 1 puts pressure on its board candidates, including the former executive vice chairman of Marathon Petroleum Corporation and the head of renewable fuels at the Finnish refinery Neste Oyj. Experts say it also avoids the negative effects that institutional investors don’t usually like.