Chief executive officer, Exxon Mobil Corporation
Born: August 13, 1938, in Watertown, South Dakota.
Education: University of Wisconsin, BS, 1960; University of Minnesota, PhD, 1963.
Family: Son of a railroad engineer; married Charlene (maiden name unknown); children: three.
Career: Exxon Corporation, 1963–1972, various engineering positions; 1972–1984, management positions; 1984–1987, senior vice president and director; 1987–1993, president; 1993–1999, chairman of the board and chief executive officer; Exxon Mobil Corporation, 1999–, chairman of the board and chief executive officer.
Address: Exxon Mobil Corporation, 5959 Las Clinas Boulevard, Irving, Texas 75039-2298; http://www.exxonmobil.com.
■ Lee R. Raymond headed one of the most powerful corporations in the world, Exxon Mobil Corporation. He began his career after receiving a PhD in chemical engineering from the University of Minnesota. The son of a railroad engineer from Watertown, South Dakota, Raymond kept his personal life out of the limelight while steering one of the world's largest corporations. Raymond set his course with Exxon early on with innovative moves that cut costs and increased profits, the hallmark of his entire career. With a changing view on petroleum-based products, Raymond defended Exxon against environmentalists and human rights activists while denying the viability of renewable energy sources. He continued to pursue natural gas projects and grew Exxon in other parts of the world, despite war and threats of war in oil-rich countries in the early years of the 21st century. As a result, Exxon continued to grow even though the protests grew louder.
Raymond prided himself on the lack of information in the media about his personal life. He was born in Watertown, South Dakota, in 1938 in the Great Plains area of the United States. Watertown sits on the shores of Lake Kempeska, and by 2004 its population had grown to 20,000. Most accounts note that Raymond's father was a railroad engineer, but little is known of Raymond's early years in South Dakota. He began his college career at the University of Wisconsin in Madison, some 400 miles east of Watertown. He completed his education with a PhD from the University of Minnesota in 1963. Both of his degrees were in chemical engineering. Even though Raymond did not venture very far from the Midwest during his early years, his career began in the oil industry in Texas when he was hired by the Exxon Corporation, which is the successor company to John D. Rockefeller's Standard Oil.
Exxon hired Raymond in 1963 and put him to work as a production research engineer in Tulsa, Oklahoma. For the next 14 years, he received promotions as an engineer, eventually ending up on the island of Aruba in the Caribbean. It was in that tropical paradise that he set the course for his career in the oil company by turning around profits at the refinery on the island. At the time of his appointment, the refinery was losing $10 million a month. By cutting costs and convincing Venezuela to provide extra-heavy crude oil, he had turned the losses into a profit of $25 million per month by 1979.
Executives at Exxon took notice of the major turnaround and named Raymond vice president of Exxon Enterprises in 1981. Raymond said that he received no directives on how to proceed with this diversified company that produced items from solar energy products to a computer chipmaker. After studying the company, Raymond decided to shut down some operations, a move approved by the leadership at Exxon. The company eventually shut down or sold all of the Enterprise businesses in existence. This move garnered Raymond the top slot in Esso Inter-America, a job used to groom future executives for Exxon.
Raymond continued to impress his superiors with his cost-cutting measures, especially after such failures as Enterprise, Reliance Electric, and a shale oil program. As the 1980s began, Raymond's style fit right in with Exxon's new direction on profit enhancement rather than on growth.
During the first four years after his appointment as CEO, Raymond increased profits on operations from the company's oil fields, refineries, and convenience stores. He solidly built up the return on capital, which determined for Exxon the measure of profitability. By 1996 Raymond had brought up the return to 14.7 percent, a feat that, according to analysts, other companies had been attempting to achieve for years. However, some analysts believed that Raymond's record was not all that impressive. Some contended that Exxon was ready for a monopoly breakup, but Raymond insisted that such a move would make little sense. The analysts cited the decline in the production of crude oil during the 1990s.
Raymond responded to those critics by buying back stock rather than by starting new oil fields. Without the distraction of exploring for oil fields, Raymond spent nearly five years getting the most out of a barrel of oil. Pinching pennies with the processes of oil production, transportation, and marketing had paid off by 1997, when it was shown that operating costs had been reduced by $1.3 billion annually.
The analyst William Randol told Fortune in 1997, "Exxon has proven itself to be very, very stingy. They just don't piss away money the way other integrated companies do" (April 28, 1997).
In 1997 Raymond made a decision to begin growing Exxon once again. When Exxon reported income of $7.5 billion in 1996, Raymond decided to change course after spending his first few years as CEO concentrating on the cost-cutting methods on which his reputation within the company had been founded.
Raymond began by pursuing a new patent that would convert natural gas into a diesel-like fuel or heating oil. He hoped this new method would boost revenues because a barrel of this new fuel could be produced for $20 in 1997, the cost of a regular barrel of oil. The process itself involved simply adding steam, oxygen, and catalysts to natural gas. Even though Exxon owned large gas fields, transporting the gas had been cost prohibitive. With the conversion of natural gas into a liquid form, transportation became less costly and required less extensive plants to process the new fuel. Cooling the natural gas to minus 260 degrees Fahrenheit converts the gas to its liquid form, which takes up much less space. Industry insiders called this new invention a revolution in the oil industry.
Opportunities began arising in Russia, Indonesia, and Africa to develop gargantuan fields at low costs. These countries had begun settling down politically by the late 1990s, and Raymond took advantage of analysts' predictions that Asia's demand for oil products would begin to expand. Raymond set a goal of increasing Exxon's crude oil output by 3 percent over the next 10 years.
Noted for his reticence to talk to the press, Raymond kept his own counsel after his appointment as CEO. Industry insiders said that he had no hobbies, nor did he have any colleagues to whom he turned when he needed advice. Public relations officials with Exxon adamantly protected his privacy. In 1997 insiders noted that he was the only Exxon CEO ever to operate without a clear second in command. Some found his lack of an inner circle refreshing. His predecessor, Lawrence Raul, had an intimate inner circle, and many who worked for Exxon found it difficult to judge whom to court and whom leave alone. No such worries existed under the leadership of Raymond.
Raymond was the only Exxon CEO ever to have earned a PhD. Many found his extreme intelligence to be intimidating while others characterized him as arrogant. He was extremely well informed on anything related to Exxon. BusinessWeek described Raymond's workplace in Irving, Texas, as being located in "a fortress-like building" with his office located at the end of a long row of anterooms (April 9, 2001). His desk was placed under the painting of a ferocious-looking tiger. This interior suite for management at the Exxon headquarters was referred to as "the God pod." A visitor reporting to BusinessWeek said that Raymond was always courteous but unmovable. "If he gives his word, which he is reluctant to do, he will keep it. But he is very difficult to deal with" (April 9, 2001).
Even though Exxon ruled as the oil giant, industry insiders described Raymond's management style as centralized. Raymond was noted for his penchant personally to have a hand in all sorts of deals within the company, becoming characterized as a micromanager.
When Exxon and Mobil announced a merger in 1998, regulators required the companies to sell some of their assets to allow competition within the oil industry. Bringing together the two major oil companies meant that the new Exxon Mobil Corporation increased its net earnings by $1.2 billion in the first year of the merger, with the potential of bringing a total of $2.5 billion in growth by 2003. When the merger was announced, it immediately became clear that Raymond would lead the combined corporation, giving the Mobil CEO a back seat in the top echelon of Exxon Mobil.
Before the merger was finished, Raymond had cut annual costs by $1.2 billion. After the merger, to increase profits Raymond reverted to his former cost-cutting methods, eliminating 2,000 executive positions out of the 3,000 in place between the two companies. Raymond also made sure that the requirements made by the Securities and Exchange Commission did not hurt the profit sheets either. The sales of such assets as service stations and a refinery brought $3 billion in cash to Exxon Mobil.
In addition to cutting executive positions and selling assets, Raymond began cutting employees throughout the company, bringing a total savings of $3.8 billion a year within four years of the merger. These huge savings came as a result of the elimination of 16,000 jobs. Despite the dire news for employees, Exxon Mobil stock rose to $84.25 on the day of the announcement of the job losses. Analysts applauded the savings and calculated that Raymond's estimates were low, predicting that the corporation would become a moneymaking machine.
When Raymond announced the job cuts, he noted that the entire blueprint for the elimination of 16,000 jobs had not been completed but said that 10,000 cuts would occur within two years, with 6,000 outside of the United States and the remaining 4,000 at U.S. facilities. Some of the job losses, approximately 6,000, came as a result of attrition, and those positions were not refilled. The rest of the employees were laid off, although they were offered a severance package that included four weeks' salary for every year worked at the company plus their highest bonus earned.
With cost-cutting measures in place, Raymond readied the company to become the biggest fish in the ocean, literally. Oil exploration in deep ocean waters beckoned Raymond despite the high costs associated with this type of experiment, especially in the uncharted waters off the coast of Africa and South America.
As the 21st century loomed, Raymond still remained steadfast in his defense of the fossil fuel business, stating at an industry conference in 2000 that Exxon would stay away from renewable sources of energy. He cited Exxon's history of concentrating on oil and said that oil would continue to be the corporation's focus.
The Oil Daily reported that Raymond was a "vehement campaigner on behalf of the fossil fuel lobby [and] has argued for years that limiting the greenhouse emissions from fossil fuels believed to cause global warning will have a devastating impact on world economic growth" (February 16, 2000).
Raymond made this announcement despite the entrance into the renewables business of such competitors as BP, Amoco, and Shell. Those companies predicted that renewables would provide half of the world's power within 50 years.
Raymond's adamant stance brought protests from the company's religious shareholders. In 2000 the Dominican Sisters of Caldwell, New Jersey, filed a resolution. According to the Oil Daily , the resolution stated that Exxon "has misinformed shareholders about global warming with inaccurate statements and unreliable information" (December 13, 2000).
Further, the group accused Raymond of making false statements based on unreliable sources. They based their findings on a report by Dr. Lloyd Keigwin, a scientist who had completed studies for Exxon on global warming, who said that Exxon had used his information in a misleading way.
Campaign Exxon Mobil, the group of religious shareholders in Exxon, cited Raymond's claim that he had a petition containing signatures of 17,000 scientists who believed that there was no consensus on global warning. Campaign Exxon Mobil argued that the signatures had been obtained from the Internet with no verification, stating that the names included those of TV sitcom characters, the Spice Girls, and the singer James Brown.
Raymond did not respond to the charges. Instead he announced that he would seek out methods to increase Exxon's efficiency while bringing larger returns to its stockholders, but he drew the line at outsourcing to other countries for research and development.
By 2001 Raymond's strategies had made Exxon Mobil one of the world's most powerful corporations. An industry insider told BusinessWeek that Exxon had only one way to do things: "the most efficient with the least risk. They want to see the studies. If the studies are yours, they want to redo them" (April 9, 2001).
As Exxon's power base grew, so did resentment over the company's arrogance, which caused analysts to turn skeptical when predicting the future of Exxon. While analysts respected Raymond's leadership, they did not have positive feelings about his methods. These skeptics pointed to Exxon's isolation within the industry as causing its own set of problems. Most of the other large corporations banded together to cut the cost of exploration and development, but Exxon went its own way.
When Raymond turned 63 in 2001, Exxon announced that he would stay beyond his official retirement in 2003, when he would turn 65. The company said that it needed time to groom a successor to the CEO. Analysts suggested that the announcement signaled the company's intention to choose a younger CEO rather than someone within the ranks just behind Raymond.
The decision may have been based on some of the difficult situations that loomed in the future for the company as Exxon was awarded gas development projects in Saudi Arabia.
In addition, in 2002 Raymond announced a host of projects in the works regarding natural gas, including the production and exploration of major gas sources in Bolivia, Indonesia, Australia, and Russia. Raymond also assured analysts that Exxon would still be able to produce the 3 percent annual average increase in oil and gas production despite the interference of the Organization of Petroleum Exporting Countries in initiating restraints on production as well as the war and unrest within the countries from which Exxon obtained most of its products.
Raymond continued to push his company on researching the technology that would turn natural gas into a diesel form of fuel. He also said that the company was concentrating on its North American sources through new drilling and seismic technologies.
By 2002 the gains from the merger of Exxon and Mobil showed that early predictions had underestimated the potential growth. The projection of a $4 billion gain in efficiency production by 2002 turned out to be low. Within the first quarter of 2002, the figure was upped to $7 billion, with another $1 billion added in 2003. Raymond said his predictions had proven that he knew how to produce profits despite changes in the economy.
Raymond often defended the environmental and human rights record of Exxon against protesters who said that the oil giant did not use accurate research or treat all of its employees across the globe fairly.
Despite his acknowledgment at a 2002 shareholder meeting that there might be a high risk of climate change due to the use of fossil fuels, Raymond still maintained that huge differences of opinion remained among the different researchers in climate science. He asked for further research but also insisted that an initiative in emissions reductions with car manufacturers was still needed.
During this June 2002 meeting, shareholders were asked to vote on two proposals, both opposed by Raymond. One concerned more development of renewable energy sources. The other involved a ban on discrimination against homosexuals.
Amnesty International and Greenpeace both hosted protest rallies in Dallas the day before the meeting, and their representatives also attended the meeting. While advisers on the voting suggested that shareholders support the renewable energy proposal, the motion was rejected by an 80 percent vote.
Raymond continued his campaign to discredit the viability of renewable energy sources. Weekly Petroleum Argus reported that Raymond said "Even 'green' energy has an impact on the environment, noting that large-scale solar and wind farms take up land and can affect wildlife" (June 3, 2002).
To appease the protesters, Raymond did concede that Exxon would report greenhouse gas emissions while cutting the emissions at facilities in an attempt to reduce energy consumption by 15 percent over a several-year period. In addition, Raymond continued to stress Exxon's dedication to work with automobile manufacturers on reducing vehicle emissions. He announced that new methods might include advancement in the internal combustion engine and more dependence on fuel cells.
Raymond told shareholders that the company was committed to work with the new technologies in an effort to remain competitive within the oil industry. He stressed that these new technologies would reduce not only costs but also the impact on the environment. His commitment to this goal was reflected in the $500 million spent by Exxon by 2002 on renewable energy sources research.
In 2003 Raymond maintained that he would remain patient as the project to convert natural gas continued its slow progress to completion. Also the expansion into Russia entered into negotiations in 2003. Analysts speculated that an agreement with Russia remained Raymond's goal before he entered into a discussion about his retirement. Raymond told Petroleum Intelligence Weekly , "I totally recognize I can't shed my Exxon background, and whatever I do reflects on the company, so that's why I'm a lifer. And I'm pleased to be a lifer" (November 10, 2003).
"Exxon Turns Its Back on Renewable Energy to Focus on Strengths in Traditional Areas," Oil Daily , February 16, 2000.
"Exxon Unleashed," BusinessWeek , April 9, 2001, pp. 58–66.
"ExxonMobil Goes on the Offensive," Weekly Petroleum Argus , June 3, 2002, p. 3.
"Exxon's Raymond Cites Virtue of Patience," Petroleum Intelligence Weekly , November 10, 2003, pp. 1–2.
Maxon, Terry, "Exxon Mobil Expects to Cut about 16,000 Jobs," Knight Ridder–Tribune Business News , December 15, 1999.
"Shareholders Press Exxon CEO," Oil Daily , December 13, 2000.
Teitelbaum, Richard, "Exxon: Pumping up Profits," Fortune , April 28, 1997, pp. 134–140.
—Patricia C. Behnke