July 28, 2021

Proxy Fights: Was Exxon Mobil a Bellwether?

In what was by far the 2021 proxy season’s most high-profile contest, Engine No. 1 succeeded in electing three directors to Exxon Mobil’s board. This Alliance Advisors article asks whether this proxy fight was a bellwether of future contests. After providing a detailed blow-by-blow of the contest, Alliance offers up the following conclusion:

We believe the Exxon fight is a bellwether in at least two ways. First, there is little doubt that Engine No. 1’s victory in the Exxon proxy fight will embolden other investors to launch board contests in the future that focus on E&S issues. Second, and perhaps more important, companies should pay close attention to the ETF (The Engine No. 1 Transform 500 ETF) that Engine No. 1 recently established.

There is a reason Engine No. 1 chose the ticker symbol VOTE. With this ETF, Engine No. 1 has staked out new ground. Rather than exclude companies from its impact fund that may not meet ESG thresholds, Engine No. 1 will include them and use its vote to “[s]trategically hold companies and leadership teams accountable while focusing on environmental, social, and governance issues that create value.”

The article notes that Engine No. 1’s approach aligns with that of the major index funds, which hold shares based on broad indexes and are increasingly using their votes to promote change.

John Jenkins