Exxon boss good pick
What’s tougher than running Exxon Mobil Corp.?
Not much. So Presidentelect Donald Trump is fortunate to land Rex Tillerson, Exxon chairman and CEO.
Every public official is expected to meet general ethical principles. Those include loyalty to the public, transparency and competence. Can he get the job done? That question doesn’t get enough attention, given the concerns over Tillerson’s ties to Russia. But his competence gene may be especially valuable because Tillerson won’t be baited by a tweet.
Disciplined and deliberate, he has cut deals with foreign leaders, often in dangerous places. He’s kept Exxon at the top in performance despite volatile swings in energy prices. He has even nudged Exxon forward on climate change and pushed the Boy Scouts to accept gays.
“He has an understated toughness and a real understanding of how the world works,” said Bruce Bullock, director of the Maguire Energy Institute at Southern Methodist University.
Daniel Yergin, an energy historian, praised Tillerson: “He’s a man with a tremendous capacity to absorb information and make decisions,” Yergin told The New York Times. “He’s very measured and disciplined and takes a long view.”
Tillerson joined Exxon in 1975 after graduating from the University of Texas, so he doesn’t have experience in government. But rising to the top of Exxon, and remaining there for a decade, is a major achievement.
Exxon is famous for its demanding approach to management. Every year, executives are evaluated in seven key areas, including safety, strategic results and total shareholder return. Outstanding performance in one area will not cancel out a poor showing elsewhere.
Tillerson’s pay is benchmarked against executives at other giants. During his tenure, his “realized” pay ranked 10th among 13 companies. Include the value of unvested stock and delayed bonuses, and his pay ranked eighth, the proxy said.
Tillerson became CEO in 2006, and in the next 10 years, Exxon outperformed its peers in the major metrics tracked by the board.
Exxon’s market value today is $27 billion higher
than when Tillerson became CEO, even though the price of crude oil is $10 lower.
Steve Coll, who wrote the 2012 book “Private Empire: Exxon Mobil and American Power,” has reservations about Tillerson. Exxon executives have disdain for the State Department, in part because Exxon’s policy sometimes had more impact on countries, Coll wrote in The New Yorker. He questioned whether Tillerson can “suddenly develop respect and affection for the American diplomatic service.”
But Coll also acknowledged the CEO’s integrity, as well as other skills. Tillerson can absorb complex political analysis, evaluate foreign leaders and negotiate with friends and adversaries. Coll noted Exxon’s strong safety record and that it avoided problems with prosecutions while operating in countries rife with corruption.
Exxon has “clawback” provisions to recoup executive pay in the event of a restatement. It has no severance agreements, so execs don’t get a safety net. Exxon also has delayed bonuses and unvested stock awards that can be forfeited if an executive does something detrimental after retiring.
In the 1990s, according to oilman Ray Hunt, Tillerson and Hunt refused to pay small bribes to expedite a deal in Yemen.
“He has the courage of his convictions,” Hunt said in a 2014 story, “and he will never do anything that creates a short-term gain at the price of a long-term loss.”
Many lawmakers have concerns about Tillerson’s close ties with Russia.
When Tillerson spoke to students at Southern Methodist University, “he said it was a matter of understanding their history and culture,” SMU’s Bullock recalled. “He said they were once an empire - and are still a very proud country with very proud leaders.”
That kind of insight will have a place in Trump’s Washington.
“He has an understated toughness and a real understanding of how the world works.” Bruce Bullock Maguire Energy Institute, Southern Methodist University.