{"id":325668,"date":"2021-08-16T18:17:00","date_gmt":"2021-08-16T15:17:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/outside-the-box-engine-no-1-is-all-talk-no-strategy-with-exxon-mobil\/"},"modified":"2021-08-16T18:17:00","modified_gmt":"2021-08-16T15:17:00","slug":"outside-the-box-engine-no-1-is-all-talk-no-strategy-with-exxon-mobil","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/outside-the-box-engine-no-1-is-all-talk-no-strategy-with-exxon-mobil\/","title":{"rendered":"#Outside the Box: Engine No. 1 is all talk, no strategy with Exxon Mobil"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3eba7b602f8\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3eba7b602f8\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/outside-the-box-engine-no-1-is-all-talk-no-strategy-with-exxon-mobil\/#The_tell_No_specific_recommendations_on_how_Exxon_should_become_a_leader_in_profitable_clean-energy_production\" >The tell: No specific recommendations on how Exxon should become a leader in profitable clean-energy production<\/a><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/outside-the-box-engine-no-1-is-all-talk-no-strategy-with-exxon-mobil\/#An_impediment_to_fighting_climate_change\" >An impediment to fighting climate change<\/a><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/outside-the-box-engine-no-1-is-all-talk-no-strategy-with-exxon-mobil\/#Henry_Butler\" >Henry Butler<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/buradabiliyorum.com\/en\/outside-the-box-engine-no-1-is-all-talk-no-strategy-with-exxon-mobil\/#_and\" >, and<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/buradabiliyorum.com\/en\/outside-the-box-engine-no-1-is-all-talk-no-strategy-with-exxon-mobil\/#Bernard_S_Sharfman\" >Bernard S. Sharfman<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong>#Outside the Box: Engine No. 1 is all talk, no strategy with Exxon Mobil<\/strong>&#8221;<\/p>\n<h2 class=\"article__subhead\" itemprop=\"alternativeHeadline\"><span class=\"ez-toc-section\" id=\"The_tell_No_specific_recommendations_on_how_Exxon_should_become_a_leader_in_profitable_clean-energy_production\"><\/span>\n  The tell: No specific recommendations on how Exxon should become a leader in profitable clean-energy production<br \/>\n<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><\/p>\n<div class=\"column column--full article__content\">\n<div class=\"article__side\">\n<div class=\"container--sticky not-active\">\n<div id=\"cx-next\" data-nosnippet>\n              <\/div>\n<\/p><\/div>\n<\/p><\/div>\n<div id=\"js-article__body\" class=\"article__body article-wrap at16-col16 barrons-article-wrap\" itemprop=\"articleBody\" data-sbid=\"WP-MKTW-0000376204\">\n<div class=\"barrons-article-ad-wrapper\">\n<div data-track=\"barrons-article-ad-wrap\" class=\"barrons-article-ad sticky_item\">\n<div class=\"barrons-main-article-ad-target sticky_target body_ad\" aria-hidden=\"true\"><\/div>\n<\/p><\/div>\n<\/p><\/div>\n<div data-layout=\"\n                inline\" data-layout-mobile=\"\" class=\"\n          media-object\n          type-InsetArticleReader\n              \n              inline\n  article__inset\n          article__inset--type-InsetArticleReader\n              article__inset--inline\n  \"><\/p>\n<div class=\"media-object-article-reader\">\n<div class=\"audioplayer\" data-sbid=\"WP-MKTW-0000376204\" role=\"region\" aria-label=\"Listen to Article\" tabindex=\"-1\" id=\"articlereader\" data-show-title=\"false\" data-theme=\"wsj-article-reader\" data-show-header=\"false\" data-show-subscribe=\"false\" data-ads-enabled=\"true\" data-save-publication=\"false\">\n        <\/div>\n<\/p><\/div>\n<\/p><\/div>\n<p>       What does Engine No. 1\u2019s recent proxy fight at Exxon Mobil have in common with the insane trading in <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/game\/\" data-internallinksmanager029f6b8e52c=\"7\" title=\"Game\" target=\"_blank\" rel=\"noopener\">Game<\/a>Stop and AMC common stock that occurred during the pandemic? The answer is that they all garnered lots of <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">media<\/a> attention but accomplished nothing. \u00a0\u00a0<\/p>\n<p> Engine No. 1, a small hedge fund with less than $40 million worth of Exxon Mobil<br \/>\n        XOM,<br \/>\n        <bg-quote field=\"percentchange\" format=\"0,000.00%\" channel=\"\/zigman2\/quotes\/204455864\/composite\" class=\"negative\">-1.72%<\/bg-quote><br \/>\n       common stock in hand, amazingly succeeded in getting three of its four nominated directors elected to Exxon\u2019s board. Unfortunately, the hedge-fund activism of Engine No. 1, seeking to enhance shareholder value, reduce Exxon\u2019s carbon emissions, and transition it into a global leader in profitable clean-energy production, was not able to provide specific recommendations on how Exxon Mobil was to accomplish these objectives.\u00a0 <\/p>\n<div class=\"paywall\">\n       For example, what precisely are the profitable clean-energy opportunities that Engine No. 1 would like to see Exxon Mobil invest in? Engine No. 1 did not provide an answer.\u00a0 <\/p>\n<p>In sum, a lack of specificity indicated that it was not truly informed about the operations of Exxon Mobil or how to manage its long-term future.\u00a0\u00a0<\/p>\n<p><strong>Read:<\/strong> Here are the oil and gas companies whose methane emissions intensity is 6 times the national average (hint: it\u2019s not the majors)<\/p>\n<p>Confirmation that Engine No. 1\u2019s activism was not expected to positively impact Exxon Mobil can be found in the lack of an associated upward movement in Exxon\u2019s stock price. As observed by Hemang Desai, Shiva Rajgopal and Sorabh Tomar in June,\u00a0whatever increase in the stock since Engine No. 1\u2019s activism became public can be attributed to a rise in oil prices that have benefited all oil and gas companies.\u00a0\u00a0<\/p>\n<p>However, even without specific recommendations or a positive market price reaction, Engine No. 1 was still able to win its proxy fight. How was it able to do this? <\/p>\n<p>No doubt the timing was right. Exxon Mobil was floundering financially as a result of a high debt load, pandemic-reduced demand for its products, and low oil and gas prices. Yet at the time that Engine No. 1 began its proxy fight in earnest on March 15, Exxon was still a $250 billion company and recognized as one of those small number of top-performing companies, based on decades of capital <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>reciation and dividend payouts, that have allowed the stock market to significantly outperform U.S. Treasurys over time. \u00a0 \u00a0 \u00a0\u00a0<\/p>\n<div data-layout=\"inline\n                \" data-layout-mobile=\"\" class=\"\n          media-object\n          type-InsetPullQuote\n            inline\n    scope-web|mobileapps\n  article__inset\n          article__inset--type-InsetPullQuote\n            article__inset--inline\n  \"><\/p>\n<div class=\"wsj-article-pullquote article__inset__pullquote \">\n<p class=\"pullquote-content article__inset__pullquote__quote\">\n        <span class=\"l-qt article__inset__pullquote__mark--left\">\u201c<\/span><br \/>\n        Exxon Mobil was floundering financially as a result of a high debt load, pandemic-reduced demand for its products, and low oil and gas prices<br \/>\n        <span class=\"r-qt article__inset__pullquote__mark--right\">\u201d<\/span><\/p><\/div>\n<\/p><\/div>\n<p>       Engine No. 1 succeeded because it focused on gaining the support of the \u201cBig 3\u201d investment advisers to index and ESG funds \u2014 BlackRock<br \/>\n        BLK,<br \/>\n        <bg-quote field=\"percentchange\" format=\"0,000.00%\" channel=\"\/zigman2\/quotes\/207946232\/composite\" class=\"positive\">+0.09%<\/bg-quote><span>,<\/span><br \/>\n       Vanguard, and State Street Global Advisors. The Big 3 own approximately 21% of Exxon Mobil\u2019s voting stock. However, that percentage significantly understates their voting power because they will likely vote all their shares while individual investors \u2014 those most likely to vote with management \u2014 won\u2019t. <\/p>\n<p> To garner the Big 3\u2019s support, Engine No. 1 appealed to their desire to be perceived as investment advisers who are making a difference in mitigating climate change. Such a perception is necessary to attract \u201cmillennial\u201d investors, the investor segment that will soon be the dominant investor type in mutual-fund and exchange-traded-fund investing. \u00a0\u00a0<\/p>\n<div id=\"cx-membership-tile\"><\/div>\n<p>So the Big 3 were under a lot of pressure to support Engine No. 1\u2019s efforts or else they would be perceived as not walking the talk on climate change. Based on their voting, it appears that the marketing implications won out over the need to actually implement value-enhancing change at Exxon Mobil. BlackRock ended up supporting three Engine No. 1 director nominees, while Vanguard and State Street Global Investors each supported two.\u00a0\u00a0<\/p>\n<h6><span class=\"ez-toc-section\" id=\"An_impediment_to_fighting_climate_change\"><\/span>An impediment to fighting climate change<span class=\"ez-toc-section-end\"><\/span><\/h6>\n<p>Perhaps most importantly, Engine No. 1\u2019s hedge-fund activism may be an impediment to the world\u2019s ability to deal with climate change. As observed by Tariq Fancy, BlackRock\u2019s former chief investment officer for sustainable investing,\u00a0<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/urldefense.com\/v3\/__https:\/www.theglobeandmail.com\/business\/commentary\/article-sustainable-investing-is-a-deadly-distraction-from-actually-averting\/?utm_medium=Referrer:*Social*Network**BMedia&amp;utm_campaign=Shared*Web*Article*Links__;KysrLysrKys!!M9LbjjnYNg9jBDflsQ!Xzq9udRAfx7TLz-ntYsKKdfP8F0wxrHRQk0MUynwcmKMqLbNVDzm-j8zejFODQ%24\" class=\"icon none\">\u201cone lesson COVID-19 has hammered home is that systemic problems\u2014such as a global pandemic or climate change\u2014require systemic solutions. Only governments have the wide-ranging powers, resources and responsibilities that need to be brought to bear on the problem.\u201d\u00a0<\/a>\u00a0<\/p>\n<p>If so, then the Engine No. 1\u2019s successful proxy fight may have caused significant harm to climate change mitigation efforts\u00a0<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/urldefense.com\/v3\/__https:\/www.theglobeandmail.com\/business\/commentary\/article-sustainable-investing-is-a-deadly-distraction-from-actually-averting\/?utm_medium=Referrer:*Social*Network**BMedia&amp;utm_campaign=Shared*Web*Article*Links__;KysrLysrKys!!M9LbjjnYNg9jBDflsQ!Xzq9udRAfx7TLz-ntYsKKdfP8F0wxrHRQk0MUynwcmKMqLbNVDzm-j8zejFODQ%24\" class=\"icon none\">\u201cby creating a societal placebo that delayed overdue government reforms,\u201d\u00a0<\/a>he added.\u00a0That is, the sustained focus on the proxy fight and the perception that Engine No. 1\u2019s victory represents a victory in the fight against climate change may have reduced our sense of urgency to advocate for strong governmental actions that will have a real impact on mitigating climate change. Fancy, the former BlackRock executive, refers to this as a\u00a0<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/urldefense.com\/v3\/__https:\/www.theglobeandmail.com\/business\/commentary\/article-sustainable-investing-is-a-deadly-distraction-from-actually-averting\/?utm_medium=Referrer:*Social*Network**BMedia&amp;utm_campaign=Shared*Web*Article*Links__;KysrLysrKys!!M9LbjjnYNg9jBDflsQ!Xzq9udRAfx7TLz-ntYsKKdfP8F0wxrHRQk0MUynwcmKMqLbNVDzm-j8zejFODQ%24\" class=\"icon none\">\u201cdeadly distraction.\u201d<\/a>\u00a0<\/p>\n<p>Engine No. 1\u2019s activism resulted in Exxon needlessly spending significant resources on defending its director nominees and thereby distracting Exxon Mobil from engaging in its current strategy of focusing on the production of oil and gas, a strategy that Engine No. 1 could not adequately disprove as being the correct one.\u00a0 <\/p>\n<p>Yes, Exxon\u2019s current strategy may result in the company stranding oil and gas assets or the company eventually losing its independent existence if the road to decarbonization speeds up, but until proven otherwise, perhaps a different hedge-fund activist that is more informed will serve that role, its strategy cannot be discounted as the one that will maximize the value of the company\u2019s stock.\u00a0<\/p>\n<p><em>Henry Butler is executive director of the Law &amp; Economics Center at George Mason University\u2019s Antonin Scalia Law School. Henry Sharfman is a research fellow at the Law &amp; Economics Center and a senior corporate governance fellow of RealClearFoundation.<\/em><\/p>\n<p><strong>Also read:<\/strong> Mentions of \u2018ESG\u2019 and sustainability are being made on thousands of corporate earnings calls<\/p>\n<p><strong>Also:<\/strong> If you support green energy, you should buy utilities and oil stocks \u2014 here\u2019s why<\/p><\/div>\n<\/div><\/div>\n<p><\/p>\n<div class=\"byline article__byline\">\n<p>    <span>By<\/span><\/p>\n<div class=\"author  hasMenu\" data-scrim='{\"type\":\"author\",\"header\":\"Henry Butler\",\"subhead\":\"The Wall Street Journal\",\"list\":[]}' itemscope itemprop=\"author\" itemtype=\"http:\/\/schema.org\/Person\">\n<h4 itemprop=\"name\"><span class=\"ez-toc-section\" id=\"Henry_Butler\"><\/span>Henry Butler<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<\/p><\/div>\n<div class=\"author  hasMenu\" data-scrim='{\"type\":\"author\",\"header\":\"\",\"subhead\":\"The Wall Street Journal\",\"list\":[]}' itemscope itemprop=\"author\" itemtype=\"http:\/\/schema.org\/Person\">\n<h4 itemprop=\"name\"><\/h4>\n<h4><span class=\"ez-toc-section\" id=\"_and\"><\/span>, and <span class=\"ez-toc-section-end\"><\/span><\/h4>\n<\/p><\/div>\n<div class=\"author  hasMenu\" data-scrim='{\"type\":\"author\",\"header\":\"Bernard S. Sharfman\",\"subhead\":\"The Wall Street Journal\",\"list\":[]}' itemscope itemprop=\"author\" itemtype=\"http:\/\/schema.org\/Person\">\n<h4 itemprop=\"name\"><span class=\"ez-toc-section\" id=\"Bernard_S_Sharfman\"><\/span>Bernard S. Sharfman<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<\/p><\/div>\n<\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/news\/\" target=\"_blank\" rel=\"noopener\">News category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"http:\/\/www.marketwatch.com\/news\/story.asp?guid=%7B20C05575-04D4-B545-75BD-8C7474790C21%7D&#038;siteid=rss&#038;rss=1\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;#Outside the Box: Engine No. 1 is all talk, no strategy with Exxon Mobil&#8221; The tell: No specific recommendations on how Exxon should become a leader in profitable clean-energy production What does Engine No. 1\u2019s recent proxy fight at Exxon Mobil have in common with the insane trading in GameStop and AMC common stock that&#8230;<\/p>\n","protected":false},"author":1,"featured_media":155363,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"","fifu_image_alt":"","footnotes":""},"categories":[70897],"tags":[],"class_list":["post-325668","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/325668","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=325668"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/325668\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/155363"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=325668"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=325668"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=325668"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}