LEX Will there be blood? The progeny of John D. Rockefeller, founder of the colossus that was Standard Oil, are gunning for the management of the most colossal of Standard’s successor companies, ExxonMobil. The family – or, at least, 64 out of 78 descendents of John D. aged 21 or over – want change. Exxon is accused of not listening properly to shareholders. It is being pressed, again, to split the roles of chief executive and chairman. Citing Exxon’s insular culture, the family perceives inadequate preparation for a world that must become less reliant on oil.
The call for an independent chairman is laudable. Forcing Exxon to do more in addressing climate change is a more questionable aim. The reality is that oil and gas will remain important to the world’s energy mix for years to come, even as alternatives are developed. In a supply-constrained world, it is hard to knock Exxon for doing what it does: providing energy very efficiently. Shareholders profit handsomely from Exxon’s discipline. As Deutsche Bank points out, Exxon makes a better return on investment in its weakest division, chemicals, than its peers make on the traditionally highest returning upstream business.
Culturally, mature oil companies are not natural homes for alternative energy businesses. Exxon, with its low cost of capital and global reach, might be more suited to acquiring breakthrough technologies developed elsewhere. The corollary of such a strategy, however, is that Exxon’s own culture must be flexible enough to nurture such additions. A better reputation for openness would help in this regard – as well as address a potentially bigger challenge than that posed by the descendents of John D. This is, after all, a US election year in which the oil price, and associated profits, loom very large.
Post and read comments on this Lex
Lex is the FT’s agenda-setting column, giving an authoritative view on corporate and financial matters. It is also one of the few parts of FT.com available only to Premium subscribers. This article is provided for free as an example. A Premium subscription gives you unlimited access to all FT content, including all Lex articles and the FT mobile Newsreader.
If you have questions or comments, please email help@ft.com or call:
US and Canada: +1 800 628 8088
Asia: +852 2905 5555
UK, Europe & Rest of the world: +44 (0)20 7775 6248
