GRUFF, TOUGH, AND OUTTA THE GOD POD
(FORTUNE Magazine) – THEY DON'T CALL IT THE GOD POD for nothing. The first time I was ushered into the executive wing of Exxon Mobil's secluded Dallas headquarters to meet CEO Lee Raymond, I felt as if I'd been granted an audience with the Pope. Raymond rarely gives interviews, and Exxon's PR people told me in hushed tones to be sure to scrutinize the boss's speeches beforehand. It was good advice. The notoriously gruff Raymond began by turning the tables and questioning me. "Why doesn't U.S. oil production really affect crude prices?" he barked. It was only after he finished interrogating me to his satisfaction that the interview could proceed.
The 66-year-old Raymond, who just announced he will retire at the end of 2005, is the last of a rare breed: a tough, unapologetic Big Oil CEO who is fiercely proud of his company's ability to deliver profits whether black gold sells for $8 a barrel or $58. His handpicked successor, Exxon president Rex Tillerson, 53, is a lifelong oilman and native Texan, but he's likely to soften Exxon's image, which wasn't helped by Raymond's aversion to anything that smacked of touchy-feely PR. Once, when I asked Raymond about global warming, the look on his face was so scornful that I half-expected him to tell me the temperature in his office was just fine.
What Raymond, who earned a Ph.D. in chemical engineering before joining Exxon 42 years ago, did enjoy talking about was numbers. And in his 12-year tenure at the top, he's delivered the most consistent performance of any American energy CEO: Exxon's shares have returned 411%, vs. 252% for the S&P 500. Last year Exxon had record profits of $25 billion. And with a market cap of $370 billion, Exxon is now the most valuable publicly traded U.S. company.
There's no reason to think those metrics will change much under the soft-spoken, low-key Tillerson. So what will change? Tillerson's promotion to president of Exxon last year coincided with a greening of Exxon's public image, and the company has recently embarked on an extensive ad campaign highlighting its commitment to reducing emissions. Although it's unlikely that Exxon will ever follow in the footsteps of aggressively green BP, Tillerson is likely to continue Exxon's more modest perestroika-like effort.
As with other fellow Big Oil CEOs, his biggest challenge will be to boost Exxon's sagging production. Despite the surging profits brought on by high oil prices, Exxon's output actually fell 2% in the second quarter, and Wall Street is counting on Tillerson to reverse this trend (no easy task).
When I asked Raymond two years ago what he'd like to do next, he said he was planning to read a textbook on differential equations. Figures fascinate Raymond, and the numbers he's offered to shareholders will be fondly recalled long after he leaves the God Pod. -- Nelson D. Schwartz