An Activist Fund, Engine No 1 Is Pushing ExxonMobil (NYSE:XON) To Overhaul Its Structured

A new activist fund, Engine No.1 has taken on ExxonMobil (NYSE:XON) forcing the energy giant to change and focus more on clean energy to boost performance. The activist fund backed by California State Teacher’s Retirement System (CalSTRS) is pushing the beleaguered energy firm which is valued at $176 billion to utilize its cash better, refresh the board and preserve its dividend. 

Activist fund want ExxonMobil to restructure 

Partner Fund Manager founder and Andor Capital Management’s co-Founder, Chris James, and JANA Partners’ ex-partner Charlie Penner founded Engine No. 1. The investment firm’s mandate is creating long-term value through positive impact by promoting active ownership. ExxonMobil will be the firm’s first public campaign. 

In a letter to the ExxonMobil board, EN1 stated that the world and energy sector is changing rapidly and the company should also change. Equally, it indicated that considering the challenges the oil and gas company is facing and its long-running underperformance it is time for stockholders to come in. EN1 holds a 0.02% stake in the company. 

EN1 identifies director nominees for ExxonMobil

Also, EN1 told the board that it had identified four director nominees that the company should appoint if necessary. They include Kaisa Hietala, former Neste renewable products EVP, former Andeavor CEO, Gregory Goff, ex-Vestas Wind Systems CEO, Anders Runevad, and senior strategists at X, Alexander Karsner. According to the firm, CalSTRS, which owns around $300 million of ExxonMobil’s value, will support the candidates once nominated to the board. EN1 has also called on ExxonMobil to implement a strategic plan and impose long-term capital allocations to create value and align management incentives. 

ExxonMobil is among the iconic companies in the energy sector that have declined significantly in recent times. Last year the company reversed its gas and oil expansion program and slashed its spending plans by 30%. ExxonMobil is reviewing the fund’s letter and it will be interesting to see whether the activist’s efforts will bear fruit. In the past, the company has thwarted activist’s efforts to reconsider its climate stance and split the CEO and Chairman roles.