Fluor, in a First, Goes Outside to Pick CEO
In a surprise move, Fluor Corp. reached outside its ranks for new leadership, announcing Wednesday that Shell Oil Co. President Philip J. Carroll will become Fluor’s new chairman and chief executive this summer.
The appointment of Carroll, a 37-year oil industry veteran, marks the first time in its 109-year history that the international engineering and construction services giant has not picked a chairman and CEO from within its own executive ranks.
Many observers had expected the job to go to one of three inside contenders who have jointly held the top office since Leslie McCraw, the company’s chairman and chief executive, took an early and unanticipated retirement in January to battle recurring cancer.
Carroll, though, is known at Fluor because Shell has been a longtime customer. The 60-year-old executive assumes his new position July 1, a day after retiring from Shell.
Carroll’s outside experience “will be very helpful” as Fluor pushes expansion of its gas, oil and energy industry business and, at the same time, completes its recovery from a year of jarring disappointments, said analyst Tobias Levkovich of Salomon Smith Barney brokerage in New York.
Fluor shocked investors and analysts early last year when it announced that it would take a $140-million write-off to cover cost overruns on two major contracts. It also said that a three-year expansion drive had created a bloated operating structure that was diminishing the company’s profit.
Carroll’s job will be to tighten Fluor’s focus, keep a lid on operating costs and return it to the 15% annual growth pace that had made it a darling of the investment community.
Carroll, who is leaving Shell on June 30 because of its policy requiring top executives to retire at age 60, declined Wednesday to comment. He said he wanted to focus his attention on Shell until he leaves.
He joined the oil company in 1961 as a petroleum engineer and moved through numerous domestic and overseas assignments, including posts as managing director in London and head of corporate administration at Shell’s Houston headquarters from 1986 until 1993. He was named president in 1993.
As head of Shell Oil, Carroll led a wholesale overhaul of operations, slashing employment by more than 10% to about 21,000 and engineering joint venture relationships with other major oil exploration and refining companies. The company posted a profit of $781 million the year he became president. Last year, earnings were nearly three times higher at $2.1 billion. Revenue during the same period rose 37% to $29 billion from $21.1 billion.
“Phil Carroll brings great energy, chemical and process industry experience, proven global leadership skills and a demonstrated track record of building shareholder value,” said Bobby Inman, a Fluor director who headed the board’s search for a new chairman.
Industry analyst Michael S. Dudas said Wednesday that Carroll is “a conservative choice, a low-key but very effective person who has done a lot for Shell.”
The market seemed unimpressed by the news as Fluor’s stock fell 44 cents to close at $47.31 a share on the New York Stock Exchange.
