By Tina Irgang
President-elect Donald Trump has nominated Exxon CEO Rex Tillerson as his secretary of state. What does Tillerson’s record at Exxon tell us about his leadership abilities and priorities?
Tillerson has been leading Exxon since 2006, with mixed results: “Exxon’s shares are way up under his leadership, but lag behind competitors, oil and gas output is down 14 percent and, while making deals abroad, analysts believe he missed out on some important growth opportunities at home,” says Fortune.
While Exxon’s stock has risen 59 percent since 2006, its rival Chevron has climbed 104 percent over that time, Fortune adds.
At the same time, Tillerson has been an extremely visible advocate for the Exxon brand. Politico calls him a “tough and calculating pragmatist” who has espoused seemingly conflicting views on global warming, based on what he considered to be in his company’s best interest.
“[Tillerson has] called climate change an ‘engineering problem’ and dismissed doomsday scenarios about global warming. And his company faces allegations it suppressed decades-old internal research about the threat of climate change. He has also backed a carbon tax, applauded world nations for approving a global agreement to tackle global warming and pushed to rethink the oil lobby’s approach to climate policy,” Politico says.
Tillerson is also a true company man, having joined Exxon more than 40 years ago, in 1975, according to The Washington Post. As he rose through the ranks, Tillerson travelled the world to make deals for Exxon, which has been cited as one of his main qualifications for the job, The Post notes.
Why is Tillerson’s nomination controversial?
However, Tillerson’s international deal making also has been cited as a concern by lawmakers on both sides of the aisle.
“Tillerson received the Order of Friendship from Russian President Vladimir Putin in 2013. … Two years before the award, ExxonMobil won a contract to explore for oil in a Russia-controlled portion of the Arctic Ocean. … Several senators have expressed concerns about this relationship, including Sen. Marco Rubio, who sits on the Senate Foreign Relations Committee,” The Post reports. That committee would have to approve Tillerson’s nomination before he can move on to a confirmation vote in the full Senate.
It doesn’t help that the deal Tillerson struck in Russia has been held up by sanctions imposed on Russia after it annexed Crimea, according to ABC. At a shareholder meeting in 2014, Tillerson was reported to have said that “we do not support sanctions, generally, because we don’t find them to be effective unless they are very well implemented comprehensively, and that’s a very hard thing to do.”
(Slate points out that a comparable CEO cabinet pick came during the Eisenhower administration, in the form of General Motors CEO Charles Wilson. Wilson famously said there couldn’t be any conflicts of interest for him because he thought that “what was good for the country was good for General Motors and vice versa.”)
Fortune also argues that Tillerson’s focus on Russia might not have been in Exxon’s best interest: “While Tillerson has ties to Russia, he partly missed a key energy development back home in the United States by ceding growth potential in the shale oil industry to smaller, more nimble rivals, including Continental Resources. That has pushed down the company’s production of oil and natural gas about 14 percent since Tillerson took office. Exxon’s operating margin has also plunged, from 15.1 percent when Tillerson assumed the CEO role to 2.5 percent in the most recent quarter.”
It remains to be seen whether Tillerson’s international focus will set him up for greater success in the cabinet post than in the corner office.
Tina Irgang is SmartCEO’s managing editor. Contact her at email@example.com.