WHEN IT COMES to trash-talking, Exxon Mobil CEO Darren Woods isn't exactly on par with, say, NBA legend Michael Jordan or former Dallas Cowboys All-Pro Deion "Prime Time" Sanders. At least in public, the buttoned-up Big Oil executive typically speaks in a near-monotone drone, softened slightly by his light Texas drawl, and chooses his words so carefully as to suggest a curated blandness. That understated presentation style was on display once again in late April when Woods announced the oil and gas giant's first-quarter earnings. And yet, behind the Exxon-speak, there was an unmistakable note of triumph, perhaps even a hint of defiance. 
On the webcast call with Wall Street analysts, Woods pointed out that a year of tumult—a pandemic, the resulting waves of lockdowns, and tumbling crude consumption—had done nothing to change the energy giant's perspective on the world. And he offered that Exxon's $2.7 billion profit in the first three months of 2021, helped by rebounding oil and gas prices, was proof that the company's strategy was right. "We knew economies would recover, populations and living standards would continue to grow—ultimately driving demand for our products and industry recovery," Woods said. Meanwhile, he noted, the efforts by the company over the past few years to restructure and reinvest had paid off: "We are a stronger company with an improving outlook." 
Translation: Take that, haters. 
The strong quarter was a much needed win both for Woods and his company after a year in which once-mighty Exxon has suffered a series of painful indignities. Collapsing oil prices caused Exxon's revenues to sink by some $83 billion in 2020 compared with the year before and sent the energy titan tumbling in this year's Fortune 500, from No. 3 down to No. 10—Exxon's lowest-ever spot in the rankings. Worse still, after more than two decades without a negative quarter, the company took a record $22.4 billion loss in 2020. That made it the biggest money-loser in the Fortune 500 by a wide margin. In August, Exxon was removed from the Dow Jones industrial average after 92 consecutive years as a member of the 30-company index, and replaced by software giant Salesforce. Adding further insult to injury, Exxon's longtime rival Chevron (No. 27 on this year's Fortune 500, down 12 spots) kept its place in the Dow. That had to sting. 
TBy April 2021, both Moody's and S&P Global had downgraded Exxon's debt for a second time in just over a year. The reason? Increased pressure to address climate change combined with the highest debt levels in Exxon's history — a by-product of aggressive investments intended to boost the company's oil and gas production. The company's net debt-to-capital ratio has risen from 16.5% to 27.8% in the past five years, and its total debt load increased by nearly $21 billion last year alone. 
TThe setbacks have given an oil-rig-size opening to Exxon's critics, who argue that the company's fortunes have been on the wane for years. Look no further than its market performance. Exxon has long enjoyed a reputation among investors as perhaps Big Oil's most disciplined operator—so cash-rich that it could invest during downturns and capitalize in booms. Love it or hate it, Exxon was the oil stock you could count on. But over the past five years, its shares have fallen 32% while Chevron's have risen 6% and the S&P 500 has soared 102%. Exxon also lags rivals BP (down 16%) and Shell (down 21%) over the same period. 
The news, reported by the Wall Street Journal in January, that Exxon and Chevron had held preliminary merger discussions raised even more questions about the future direction of the company. (Exxon declined to comment on the report.) 
Underpinning all the tumult is a suspicion that Exxon's long-established world view—of oil and gas being at the center of economic growth for decades to come—has become financially shaky, even deeply risky, in a new age of energy transition away from fossil fuels and toward more sustainable sources. While peers like BP, Shell, and France's Total have made commitments to reach net-zero carbon emissions by 2050 and have said they will accelerate investments in wind and solar, Exxon has dragged its feet on investing in anything outside its core oil and gas business. 
Sensing weakness, activist investors—led by a newly created investment firm called Engine No. 1—have launched a proxy battle challenging Exxon over its lack of action on an alternative energy strategy. They are seeking to remake the company's board with a slate of four new directors who, they argue, can help guide Exxon's long-overdue evolution. In response, Woods has announced a series of overhaul initiatives—in particular, the launch of a new business to commercialize Exxon's low-carbon technology—that have been received with raised eyebrows by a wide range of skeptical observers, who view the moves as half measures and distractions. As Fortune went to press, the two sides were gearing up for a showdown at Exxon's annual meeting in late May. 
Problems are brewing for Woods inside Exxon, too. Morale has been hurt by the company's plan to lay off 15% of its workforce, cutting some 14,000 jobs, including contractors. And four years into his tenure as CEO, Woods has become a divisive figure for many at the company, according to interviews with current and former Exxon employees from all levels and departments. He is criticized by some as lacking the blustery defiance and swagger of his predecessors in the corner office, and by others as not being more of a visionary change agent. 
Woods insists that the company's strategy doesn't rely on higher oil prices. But he appears to be banking on the success of a classic Exxon tactic in times of trouble: push ahead and wait for the cost of a barrel to rise. The higher that crude goes—the price surged from $37 at the end of October to $68 as of late May—the better the odds that the strategy succeeds. And at a moment when the company arguably is under more pressure to change than at any point in its 135-year history, the bigger question is this: Does it even want to? 
WOODS SOUNDS RELAXED and confident. In a phone conversation with Fortune in early April, he is reflecting on the turbulence of the past year. Painful as it might have been, 2020 was "a pivotal year" for Exxon, he says, "not only because of what happened with the pandemic and the economy and the demand for the products that we produce, but it was also a time when I think several things came together." The CEO and his leadership team had just completed a reorganization plan in the fall of 2019, he explains. And the fallout from COVID-19 pushed the entire organization to move faster. "The pandemic really accelerated the effort there and gave the organization a better understanding of the urgency." 
Exxon didn't appear to be in need of a major overhaul when Woods succeeded Rex Tillerson as chairman and CEO on Jan. 1, 2017. Indeed, in Woods' first full year at the helm, the company earned a hefty $19.7 billion profit, and its "return on average capital employed"—a metric traditionally beloved by the company—was 9%, or more than double that of the previous year. But its debt had risen sharply in the years before Tillerson's departure to serve a stint as secretary of state in the Trump administration. And it soon became clear, inside and outside the company, that Tillerson had left Woods with a mess to clean up. Among Tillerson's missteps: overpaying in the $35 billion acquisition of the Texas shale company XTO in 2010, when the shale boom was in full swing. 
To jump-start growth, Woods adopted a quintessentially Exxon approach: He decided to bet on big projects that would pay off handsomely when oil prices rose. His reorganization plan called for the company to bump up operational spending by $30 billion to $35 billion every year through 2025, focusing on a "big five" of particularly promising, large-scale oil and gas projects—from the Permian Basin in Texas to Guyana to Mozambique—while selling off other assets. Woods projected that plan would result in a jump to 5 million equivalent barrels of oil per day, and double earnings, by 2025. 
Then COVID-19 changed the math. Global oil demand in 2020 dropped a historic 8.8 million barrels per day from 2019, according to the International Energy Agency, and prices fell even more dramatically. (The cost of a barrel even dropped briefly in trading to negative $38 per barrel in April 2020.) 
Woods immediately slashed capital spending by 30% and said costs would be reduced by $6 billion through 2023. Exxon's dividend, however, was one cost that remained untouched. Unlike BP and Shell, which both reduced their dividends for 2020 in the wake of large losses, Exxon kept its payout steady—even borrowing to keep it fully funded. 
And as he was leading the company through these challenges, Woods was struggling to find his footing with Exxon's workforce, according to current and former employees. His two forerunners in the CEO job were a tough act to follow as front men. Lee Raymond—who in 1999 orchestrated the merger of Exxon and Mobil, reuniting two offspring of J.D. Rockefeller's Standard Oil, and led the combined company until 2005—was famously hard-charging. And Tillerson was a brash and charismatic leader in his own right. Woods, by contrast, is more publicly reserved. An Exxon lifer who studied engineering at Texas A&M, he is a product of the company's conservative, command-and-control culture and was regarded as sharp and straight talking when he landed the job. But his leadership style has failed to inspire some employees and rubbed others the wrong way. 
As an example, current and former employees point to a disastrous town hall meeting about a year into Woods' tenure as CEO. Speaking off-the-cuff, Woods defended the company's rigidly competitive, deeply unpopular employee ranking system as meritocratic. He also related a story about firing a crying female employee, only for her to come back and thank him a year later for giving her the chance to pursue new opportunities, according to employees who saw the town hall. The meeting's overall effect was to give an impression of Woods as tone deaf and arrogant. Internally, the appearance was regarded as a "car crash," says one former senior manager, and word spread rapidly within the company. In response to questions about the town hall, an Exxon spokesperson provided this statement: "Darren continues to engage and talk with employees on a regular basis, takes part in town halls, and listens to employee feedback and considers it as he leads the company." 
ENGINE NO. 1 did not waste any time announcing itself to the world. On Dec. 7, the newly formed activist investment firm, with a bankroll of $250 million deployed in public markets, launched its very first campaign, with Exxon as the target. As an opening salvo, the fund said in a statement that "no company in the history of oil and gas had been more influential," but that "it is clear, however, that the industry and the world it operates in are changing and that Exxon Mobil must change as well." 
The San Francisco–based firm was founded by Chris James, a hedge fund veteran and cofounder of Partner Fund Management and Andor Capital Management. It's backed in the Exxon campaign by some of the largest pension funds in the U.S., and it asserts that Exxon's board of directors does not include members with sufficient knowledge of the energy industry to lead a green transition. They have picked four candidates to join the board who, they say, have the right credentials. One candidate is the former CEO of Andeavor, the U.S. oil and gas company; another led the transformation of a Finnish energy company's shift toward renewable fuel.