A Two-headed Giant Dilemma
Some call Exxon Mobil a shining star. Others say its stodgy style cries out for a total makeover
Exxon's self-assuredness, in the view of many, translates to arrogance in its public-policy dealings. The legacy of the 1989 Valdez disaster lives on, partially because Exxon continues to fight a $4.5 billion punitive-damage judgment in a lawsuit filed on behalf of fishermen and others hurt by the Alaskan oil tanker spill. The company points out that it paid $1 billion in settlements with state and federal governments, $2.2 billion on Prince William Sound cleanup, and $300 million to compensate those affected by the spill. Exxon has steadfastly maintained that the punitive award was "excessive." Former Alaska Gov. Tony Knowles implored Raymond to settle the case: "He basically told me, 'We'll settle that in court,' period, with a hard, cold look."
Even more contentious is Exxon's stance on whether the burning of petroleum is causing global warming, an issue that will be raised at its May 25 shareholder meeting. Shareholder activists withdrew climate-change resolutions at six oil and gas companies after executives agreed to meet. But Exxon declined such a sit-down. At last year's meeting, Dale McCormick, then the treasurer of Maine, asked Raymond if she could pose a question on how the company was preparing for potential costs if it were ever held responsible for harm due to climate change. Raymond responded, "You can pose anything to me," but whether he would answer was "a different question." McCormick believes he inappropriately made her the object of ridicule, given that she represented 3 million shares in the Maine state retirement system.
No laughing matter to environmentalists is Exxon's funding of research that has cast doubt on climate-change science, as well as its bankrolling of groups that oppose environmental regulations and U.S. participation in the Kyoto Protocol. Critics contrast Exxon's attitude with that of the No. 2 oil company, BP, which not only has an internal program to reduce greenhouse gas emissions but has also invested heavily in alternative energy. "Exxon Mobil is probably the only supermajor that has not been involved in the solar industry," says Rhone Resch, president of the Solar Energy Industries Association. "I think that BP and Shell and ChevronTexaco view themselves as energy companies, and Exxon Mobil views itself as a petroleum company."
Exxon's detractors say that way of thinking emanates from Raymond, who dismisses the notion that the world will retreat from fossil fuels this century and who questions the profitability of renewable energies. "Exxon is the soul of corporatism," says shareholder activist Robert Monks, who has proposed separating the chair and chief executive positions--an item Exxon kept off its proxy ballot this year, although it garnered 27 percent of shareholder votes last year. Says Monks: "It is the company that most clearly represents centralized power and unelected officials having an unacceptable impact on life in a democratic society."
With company coffers awash in earnings, the Exxon board seems perfectly happy with Raymond, having kept him on two years past the normal retirement age of 62. His presumed successor, Tillerson, is considered an equally conservative choice. "They are not in the business of making friends; they're in the business of generating profits for the shareholders," says Oppenheimer's Gheit. Other companies might try to distinguish themselves through slogans or PR, but they aspire to Exxon's profit per barrel, about $1 higher than that of its competitors. Says Gheit, "They are the gold standard the other oil companies in the industry follow."
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