William E. Greehey
1936–



Chairman and chief executive officer, Valero Energy Corporation

Nationality: American.

Born: 1936, in Fort Dodge, Iowa.

Education: St. Mary's University of San Antonio, Texas, BBA, 1960.

Family: Married Louree Bruce; children: five.

Career: Price Waterhouse, 1960–?, accountant; Exxon, ?–1963, auditor; Coastal State Gas Corporation, 1963–1968, indenture administrator; 1968–1973, senior vice president of finance; LoVaca Gathering Company, 1973–1980, CEO and vice president; Valero Energy Corporation, 1980–, chairman and CEO.

Awards: Distinguished Alumni Award, St. Mary's University, 1986; Golden Plate Award, American Academy of Achievement, 2000; Horatio Algier Award, Horatio Alger Association, 2001; Business Hall of Fame, Texas, 2002.

Address: Valero Energy Corporation, 1 Valero Place, San Antonio, Texas 78212; http://www.valero.com.

■ William E. Greehey rose from humble origins to become the chairman and CEO of Valero Energy Corporation, one of the largest independent oil-refining companies in the United States. Greehey saw Valero through a price plunge in unleaded gas in the 1980s that threatened its existence; he eventually turned the debt-ridden corporation into a flourishing Fortune 500 company with approximately 20,000 employees and revenues of $38 billion. Industry analysts and colleagues described Greehey as a tenacious man whose ambitious vision ultimately made Valero into one of the most successful oil refiners in the nation.

FROM SMALL TOWN TO BIG TIME

Greehey grew up in the small town of Fort Dodge, Iowa, in a loving but relatively poor family. By the time he was 12 years old, Greehey had found employment in order to help support his family. Equipped with a strong work ethic and a dream of attaining more in life, he joined the air force in order to benefit from the GI bill and become the first person from his family—as well as his neighborhood—to go to college.

After completing his tour of service, Greehey attended St. Mary's University in San Antonio, Texas. At the Catholic college Marianist brothers helped arrange for further financial aid, and Greehey also worked nights and weekends parking cars at a hospital. He went on to complete his four-year course of studies in business administration in two and a half years, earning numerous academic honors in the process. After graduating in 1960, Greehey first became a certified public accountant and worked for Price Waterhouse. He then joined Exxon as an auditor. In 1963 he was hired by Coastal State Gas Corporation, where he rose quickly through the ranks to become senior vice president in 1968 at the age of 32.

In the early 1970s Greehey's career reached a turning point. A subsidiary of Coastal, LoVaca Gathering Company, found itself being sued by natural-gas utilities throughout Texas when it could not fulfill its contracts due to a short supply of natural gas. In 1973 the courts appointed Greehey as LoVaca's CEO and president and charged him with negotiating a settlement, which many industry analysts believed would be an impossible task. But Greehey proved them wrong and turned the company around by striking a $1.6 billion deal. In an article in Philanthropy World Magazine , the former Texas governor Dolph Briscoe noted that taking over LoVaca would have been "too daunting a task for some people, but it never occurred to Greehey that he would not succeed in turning the company around and reaching a successful settlement" (August/September 2003).

FACES NEW CHALLENGE

Greehey's turnaround of LoVaca reached a conclusion in 1980, but his relations with the company had not yet ended. The agreement to meet LoVaca's debts had necessitated the creation of a new company called Valero Energy Corporation. When the spin-off occurred in 1980, it was the largest in U.S. history. Greehey was appointed as the head of Valero and soon found a whole new set of challenges awaiting him.

One of Greehey's early decisions was to diversify the natural-gas supplier into the refinement of unleaded gasoline; he had a hunch that the company could prosper from increasing fuel shortages and the industry's general lack of specialized refining capacity. Greehey focused on the use of residual fuel oil, a byproduct of the process of crude-oil refinement, to produce the desired unleaded gas. He made arrangements to obtain supplies from Saudi Arabian refiners, bought an old refinery in Corpus Christi, and spent $600 million to build a new refinery on the old site. In an interview with Claire Poole of Forbes , Greehey recalled, "The headlines in San Antonio said buying the refinery was the biggest mistake we'd ever make" (April 13, 1992).

For a while it looked as though the analysts would be right. A yearlong strike by Great Britain Coal miners beginning in 1984 caused much of Greehey's Saudi supply of residual fuel oil to skyrocket in price because of the greater demand for fuel with which to fire British boilers. Greehey and Valero were hit again when European refiners decided to boost production of unleaded gasoline from residual oil and then dump stores on the U.S. market. As 1984 came to a close, Greehey's refinery in Corpus Christi was losing $250,000 a day, according to some industry analysts. The company's stock dropped from around $20 per share in 1983 to just $5.88 per share in 1984.

Greehey avoided panicking and was determined to see Valero through the tough times. He sold off the company's west Texas pipeline and some of its preferred stock to raise around $80.5 million. Still, by 1986 Valero had lost approximately $50 million and incurred around $900 million in debt. The following year Greehey decided to spin off a substantial portion of Valero's gas-pipeline operation into Valero Natural Gas Partners, a move that reduced Valero's debt load by $700 million and saved the company $45 million a year in interest expenses.

In 1988 the bailout started to pay off as refining margins began to improve. Valero earned $30.6 million on sales of $770 million that year. Greehey's decision to build the new refinery in Corpus Christi also paid dividends in other ways. Because they had constructed one of the most modern and efficient refineries in the country, Greehey and Valero did not need to spend any money to comply with the refinery standards of the 1990 Clean Air Act; partly as a result of the act several of Valero's competitors were ultimately forced to close down.

FORGES AHEAD

Valero's earnings reached $98.7 million on revenues of more than $1 billion in 1991. Greehey retired as the company's CEO in 1996, but his retirement lasted only four months, as his replacement, who had become CEO on June 30, 1996, resigned following a board meeting. Greehey came back on board just as the company was making numerous transactions that focused on the selling off of natural-gas assets in order to reduce the company's operations to oil refining and marketing exclusively.

By the time Valero Energy Corporation completed its divestitures of the natural-gas divisions, Greehey had already set in place the foundation for the company's future success. According to many industry analysts, one of his most significant moves was the acquisition of Basis Petroleum's three refineries the previous April, when refining margins between costs and prices had been narrow and owners had been willing to sell. Analysts pointed out that Greehey had been right in predicting that refining margins would widen and that purchasing the refineries to add to Valero's only existing refinery in Corpus Christi would be a boon to the company. Greehey told David Hendricks of the Knight Ridder/Tribune Business News that the second and third quarters were good and "the fourth quarter will be very good. We're going to have a record year" (August 24, 1997).

Greehey continued to successfully guide Valero; in 2001 he was the highest-paid executive of a publicly traded U.S. upstream or downstream oil company. Although already the largest U.S. independent oil refiner by 2002, Valero continued to expand through the purchase of other refineries such as Ultramar Diamond Shamrock. In January 2004 Valero posted record profits and reduced its debt by $725 million. The company reported net incomes of $131.6 million for the fourth quarter of 2003 and $621.5 million for the year, which were record highs. Bolstered by the company's success, Greehey once more looked for acquisitions. He told Paul Merolli of the Oil Daily , "We feel there is room to grow in the East Coast, Gulf Coast, Mid-Continent and—excluding California—the West Coast" (January 28, 2004).

MANAGEMENT STYLE: EMPLOYEES FIRST

Industry analysts noted that Greehey had grown up in the face of adversity and that his experience certainly played a role in his never-say-die management attitude. They credited his shrewd business deals with bringing Valero back from the brink of collapse in the mid-1980s. Colleagues and industry watchers said that his dedication and determination were the primary reasons for Valero's overwhelming success over the years.

Both analysts and colleagues noted that in spite of his business wheelings and dealings Greehey always considered Valero's most important asset to be its employees. Fiercely loyal to the company's management and workers, he referred to them as the "Valero family." This loyalty was best demonstrated by the facts that the company never laid anyone off and that employees received the best pay and benefits in the industry. Because of Greehey's leadership Fortune magazine recognized Valero in 2003 as one of the "100 Best Companies to Work For in America."

Greehey's personal philosophy was to share Valero's success with the community through various initiatives. The company received numerous honors, including the Points of Light Foundation's national award for Excellence in Corporate Community Service and the United Way's Spirit of America Award, its highest corporate honor. Greehey also donated his personal time and money to worthy causes; he raised funds to build an athletic arena for his alma mater, St. Mary's, which named the complex Bill Greehey Arena.

LOOKING GOOD

Although Greehey had initially planned on retiring in 1999, he continued to lead Valero into the 21st century. In 2004 Valero had an extensive refining system with a throughput capacity of over 2.4 million barrels per day; its refining network stretched from Canada to the U.S. Gulf Coast and from the West Coast to the Caribbean. Greehey remained optimistic about the future, telling Merolli of the Oil Daily , "As far as the fundamentals are concerned, they've never looked better to us" (January 28, 2004).

In addition to his duties at Valero, Greehey served in numerous capacities for other organizations, serving on the board of trustees of St. Mary's University and on the Boy Scouts of America's National Advisory Council. He also served on the board of trustees of the United Way of San Antonio and Bexar County and on the boards of the Southwest Foundation for Biomedical Research, the Cancer Therapy & Research Center, and the Alamo Board.

See also entries on The Coastal Corporation and Valero Energy Corporation in International Directory of Company Histories .

sources for further information

Hendricks, David, "Margins Helping the Texas-Based New Valero Energy Corp.," Knight Ridder/Tribune Business News , August 24, 1997.

Merolli, Paul, "Bullish Valero Looks to Grow after Record Year," Oil Daily , January 28, 2004.

Poole, Claire, "Stubbornness Rewarded," Fortune , April 13, 1992, p. 54.

"Refining the Meaning of Success," Philanthropy World , August/September 2003, http://www.philanthropyintexas.com/03augsep/bill-greehey.htm .

—David Petechuk



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