Investors are no longer sitting back and accepting the status quo and the decisions made by the companies where they own stock. Instead, investors are becoming savvier about their voting rights, which gives them the ability to make changes within a company. This knowledge has led to a new type of investor: the activist investor. One such Activist investor is Chris James, a longtime hedge fund specialist. Recently he has founded a new hedge fund firm called Engine No 1. Through this firm, Chris James plans to educate his investors.
He accomplishes it by showing them that they can’t make a significant difference in corporate decision-making. James’ most recent effort as an activist investor is to take on Exxon Mobil. Together with other strong investors, he uses their voting rights to demand that ExxonMobil make environmental changes and invest in clean energy projects. As head of Engine No. 1 in San Francisco, Chris James hopes to have reached a tipping point where they can influence the big fossil fuel companies. With the help of the California State Teachers Retirement System fund, also located in San Francisco, James believes he has enough voting rights to make changes to the ExxonMobil board of directors.
A $340 million investment is a significant enough stake to make a change. The idea is to refresh the board of directors, get new ideas going, and hopefully invest in projects with clean energy technology. Over the years, according to Chris James, Exxon has successfully handled other hostile takeovers, so this may not be anything new for them. But now, in this economic worldwide downturn, it may be time for ExxonMobil to start listening to its investors. Especially if it wants to get past its stagnant position and experience Revenue growth again. Chris James hopes the support of his investors is enough to bring about change at Exxon. For the time being, the board of directors at Exxon reviews the letter submitted by Engine No. 1.