Calstrs’s Crucial Phone Call Eased Path for Activist’s Exxon Win


At the height of the proxy battle led by investment fund Engine No. 1 to name a slate of dissident directors with environmental and energy experience to the board of Exxon Mobil Corp., in March, the oil giant suddenly added two more climate-aware members to its board .

It was the kind of half-measure that might have buried the long-shot campaign led by Engine No. 1, an underdog activist fund, if enough investors had been convinced that Exxon was sincere, recalls Kirsten Snow Spalding, senior program director of the Investor Network at Ceres, a sustainability nonprofit .

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So it was to Spalding’s great relief when Aeisha Mastagni, a portfolio manager from the California Teachers Retirement System, told her and others on a phone call soon after that she continued to support Engine No. 1’s plan. “Exxon hasn’t earned the right to appoint their own directors,’” Spalding recalled her saying.

relates to Calstrs’s Crucial Phone Call Eased Path for Activist’s Exxon Win

Aeisha Mastagni

Source: California State Teachers’ Retirement System

Mastagni may be the least-known player in the David and Goliath saga of Engine No. 1 vs. Exxon, but many think the 45-year-old, who leads corporate engagement at Calstrs’s sustainable investment and stewardship strategies unit, also was the make-or-break factor.

At Mastagni’s urging, Calstrs, the U.S.’s second largest public pension fund, came out in support of Engine No. 1’s alternative slate the day it was announced last December, giving the startup instant credibility it might otherwise have lacked. After that, Mastagni led a steady push to educate other Exxon shareholders.

Charlie Penner, who ran the campaign for Engine No. 1, said plainly, “I don’t think it would have happened without her. She was incredibly forceful in her advocacy for why Calstrs should do this.”

Mastagni started her career right out of college working in the corporate engagement department at the California Public Employee Retirement System, the country’s largest public pension fund. Over the next several years, she learned to read a proxy statement and began to develop relationships with activist fund managers. In 2009, she took those skills to Calstrs, where she stood out for her commitment to shareholder activism at the sometimes cautious pension fund.

She and Penner met and bonded in 2011 when they were both part of a group fighting the U.S. Securities and Exchange Commission’s efforts to shorten the amount of time investors had to give notice to a company once they’d amassed a certain proportion of shares. Both believed it would undercut the ability of activist investors to build up the financial leverage they needed. The SEC ultimately dropped the issue.

“Long before it was fashionable, she was really the biggest advocate for the idea that institutions like Calstrs should be using their voice and their votes, to get companies to think more long term,” Penner said.

Prior to Exxon, Mastagni and Penner said that they had choreographed two previous activist maneuvers—one in 2018, when they lobbied Apple Inc. for more parental controls to gadgets to curb growing addiction among children, and another sustainability-related measure last year, which neither would discuss in detail. Both efforts were successful, Penner said.

When Penner approached her to see if Calstrs would support Engine No. 1’s director candidates for Exxon in the summer of 2020, Mastagni was ready. She’d already been advocating within Calstrs to add a level of engagement that went beyond floating shareholder resolutions and holding calls with company management. She called it “activist stewardship.”

“We see…

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