Last December, when a week-old hedge fund named Engine No. 1 challenged Exxon Mobil Corp. to change its ways, laughter echoed through Wall Street circles, from the fund's name that recalled a famous children's book to its tiny, then-$40 million stake in what was once the world's largest publicly traded company.
Just six months later, the fund delivered a massive blow that rippled throughout the oil-and-gas industry. Engine No. 1's campaign forced Exxon to accept new board members who could bring about a reckoning over its business strategy and confront the risk of global climate change that many investors say Exxon has long been reluctant to address.
Companies with a market value of $250 billion like Exxon rarely face, much less lose, shareholder battles. But stakeholders familiar with Exxon's thinking said Wednesday's defeat was years in the making due to ongoing weak returns.