He says the hedge fund that ExxonMobil has surpassed will have to cut oil production

Activist investors invoked the dangers of climate change win an amazing proxy fight ExxonMobil said this week that the main supermarket should reduce oil production, stating that management will continue to press management to respond to a shareholder vote.

“They have to position themselves to be successful,” said Charlie Penner, who has led hedge fund funds for Engine No. 1 against the company. “You would certainly believe that it would mean less oil and gas production in the future.”

The 1st engine, named after the San Francisco Fire Brigade, embarked on its daring endeavor in December, appointed four directors to the Exxon board and warned of the “existential risk” posed by its commitment to fossil fuels.

The Chutzpah show put a hedge fund created last year against the world’s most famous oil company, with its colossal geopolitical growth and financial connotations.

One on Wall Street the most expensive proxy fights It ended at Wednesday’s extraordinary annual meeting when ExxonMobil sought to describe what critics described as a version of a filibuster senatorial company, delaying the closing of the vote while taking an impromptu one-hour break before CEO Darren Woods raised questions about the company’s strategy.

Exxon believed that was ideological. . . Our idea was that this would have a positive effect on the share price

It was the first time Exxon it dealt with the voting of shareholders of that nature.

“Like many of the things we saw in this campaign, the way the meeting was handled was under that iconic company,” Chris James, founder of Engine No. 1, said in an interview with the Financial Times.

“Watching that meeting yesterday was a perfect example of not realizing that the world has changed. Everything was visible.”

Eventually, Exxon announced it to shareholders selected Two 1-engine candidates after a preliminary vote count. The fund expects to announce a third when there is an official vote count, probably in the middle of next week.

The No. 1 engine will closely monitor steering behavior, Penner said. Some analysts have suggested that Exxon’s management may exclude new fund managers.

“I wouldn’t recommend it,” he said.

BlackRock and Vanguard, Exxon’s two largest shareholders, both backed some of the executives named to the 1st engine – environmentalists who criticized the company’s management said Wall Street heralded a new era in its approach to climate risk.

But the 1st engine made it clear that the campaign Exxon had in recent years was about financial underperformance.

“Exxon thought it was ideological,” James said. Engine 1 was “a capitalist group that was certainly non-profit,” he added. “Our idea was that this would have a positive impact on the share price,” he said.

The hedge fund does not require Exxon to repeat the renewable energy movement made by BP.

“BP has spent a billion dollars to buy half of the wind farm developed by Equinor, which is not a great business model and has been penalized by the market,” said Penner, the UK’s largest oil company. final agreement With Norwegian company.

Penner said the 1st engine will give Exxon time to develop a new strategy – but there would be profound changes as the world reduces its carbon emissions. The faster-than-expected energy transition undermined Exxon’s assumptions about long-term demand for oil, Penner said.

“What we’re saying is: plan the world so that maybe the world doesn’t need you [oil] barrels, ”he said.

It would be a tight exit for a company that produces nearly 4m barrels of oil and gas a day, or more than 4 percent of the world’s total, and has made long-term plans for a big new crude. oil projects In the US and off the coast of Guyana.

Exxon said it “welcomes new directors” and “will share our plans in detail with them and listen to their views.”

The success of the No. 1 engine has claimed that a new era of shareholder activism could begin. The fund has a stake in about $ 50 billion in a $ 250 billion company, which was the world’s largest in terms of market capitalization less than a decade ago. Other companies are on display.

“Our intentions are clearly broader than Exxon,” James said.

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