Exxon Mobil — the world’s largest company in terms of market capitalization — announced yesterday that chairman and CEO Lee R. Raymond, who is 66, would retire at the end of the year after 12 years on the job. As is typical of ExxonMobil’s conservative management style, the company also announced that Mr. Raymond will be repaced by native Texan, Rex W. Tillerson, who is 53 and, as ExxonMobil’s president, has been a longtime company insider being groomed to replace Mr. Raymond. Here is the company’s press release on the change, and here is an earlier post about an interesting interview with Mr. Raymond.
Mr. Tillerson — who is from Wichita Falls and is a University of Texas at Austin alum with a degree in civil engineering — has the quintessential tough act to follow. Mr. Raymond managed ExxonMobil into a more successful company in almost every respect, including the successful 1999 merger with rival Mobil Corp. Probably the biggest problem that Mr. Tillerson will face is the sheer size of the type of exploration projects in which ExxonMobil invests. Over the past decade or so, the cost of those projects — often hundreds of millions — has grown quickly as producers seek to tap formerly uneconomic reserves. As the increased price of oil justifies even larger investment, the price of those projects will likely grow into the several billions over the next decade. Laying off a large part of projects that size to hedge risk is no easy task.