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Exclusive: Engine No. 1 partner who challenged Exxon will leave hedge fund

by Mike Robinson

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© Reuters.

By Svea Herbst-Bayliss

BOSTON, (Reuters) – Engine No. Charlie Penner (head of active engagement at 1), who quarterbacked and conceived this year’s board challenge, is Engine No. Exxon Mobil Corp (NYSE:) that stunned the corporate world, is leaving the sustainability-focused hedge fund, people familiar with the matter said.

Engine No.1 partner Penner is retiring. According to sources, Penner has told the firm that his resignation is being considered.

Engine No. Engine No. 1 didn’t immediately reply to our request for comment.

Engine no. Engine No. 1, with only $250m in assets, opened its doors less than one year ago. It made an impressive splash when three shareholders elected the directors that the hedge fund had nominated for the board of U.S. Oil Company. In an initial $40 million investment, the hedge fund claimed that Exxon was in dire need of new leadership due to poor financial results and lack of comprehensive plans for climate change. The campaign cost $12.5 million.

Penner was a partner in Engine No. According to two sources, Penner joined Engine No. 1 as a partner in October 2020 and introduced the idea to fight Exxon. The campaign saw him lead a team that selected nominee directors, spoke with Exxon’s board and presented Exxon’s case to shareholders Vanguard, BlackRock, (NYSE:) State Street (NYSE:).

Chris James founded the new company and he made his move after spending 15 years in Barry Rosenstein’s activist firm Jana Partners.

Another Engine No. The investments in Engine 1 include Microsoft (NASDAQ), General Motors(NYSE:) and Square Inc (NYSE:). The firm launched an exchange-traded fund in June, hoping Main Street investors will want their portfolios to support environmental, social, and governance (ESG), following its Exxon win.

Penner worked for activist campaigns over a decade. He plans to continue these efforts while also collaborating with large investors.

His 2018 campaign was the first to be ESG-focused. Jana Partners helped Apple (NASDAQ:), to tackle the growing dependence of youth on its iPhones. Both the Apple and Exxon campaigns were supported by CalSTRS, the pension fund of California State Teachers Retirement System.

People familiar with the situation say that Penner in 2019 privately pressured McDonald’s Corp.

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