Shell Names van Beurden as Surprise Choice for CEO

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AFP/Getty ImagesRoyal Dutch Shell's newly appointed CEO, Ben van Beurden.
By Sarah Young and Kate Holton

LONDON -- Royal Dutch Shell named head of refining Ben van Beurden to replace chief executive Peter Voser, a surprise appointment to steer Europe's biggest oil firm through an industrywide battle to replace reserves and control costs.

Analysts and investors hadn't considered van Beurden, who has worked for the company for 30 years, as a possible contender to replace Voser next year.

Their early focus was on Finance Director Simon Henry and other divisional heads Marvin Odum, Matthias Bichseland and Andrew Brown.

Voser, who built the oil company into a leader in liquefied natural gas and was finance director at the company before taking the helm in 2009, shocked the industry by announcing his early departure over two months ago.

Shares in Royal Dutch Shell (RDS.A, RDS.B) gained 1 percent in early trading Tuesday following the appointment of the relatively unknown van Beurden, who only joined the company's executive committee in January.
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"It's initially something of a surprise. The question is, who is this guy," Royal Bank of Canada analyst Peter Hutton said.

Shell said van Beurden, a 55-year-old Dutchman, had a deep knowledge of the industry, having worked across a range of businesses and countries since he joined the firm in 1983.

"Ben will continue to drive and further develop the strategic agenda that we have set out, to generate competitive returns for our shareholders," said Chairman Jorma Ollila.

Van Beurden, whose new job will start next January, has worked in both the upstream and downstream parts of the company including within the increasingly important LNG business for 10 years.

His appointment comes as the company and its industry face huge challenges.

Shell is the western world's number two company by production behind Exxon Mobil (XOM). But, like its peers, it is struggling to replace reserves and boost production, and faces a squeeze on earnings as costs rise while the price of oil falls.

Amongst the other candidates who had been tipped as possible replacements for Voser were the company's head of upstream operations in the Americas, Marvin Odum, director of projects and technology Matthias Bichseland and Andrew Brown, who became head of international upstream last year.

RBC's Hutton pointed out that while the appointment of van Beurden was a surprise, Shell had in the past named bosses from the downstream, or refining, part of the business including Voser's predecessor Jeroen van der Veer.

He oversaw the initial stages of a recovery at Shell, which a decade ago was engulfed by crisis following a dramatic downgrade of reserves which rocked investor confidence when it became public in 2004.

Van Beurden, a chemical engineering graduate, has first-hand experience of the reserves crisis. He worked at the time as management assistant to Phil Watts, the CEO who was sacked as a result.

"He was clearly a high-flyer then and I am not surprised at all that he's made it all the way to the top," said a former colleague who no longer works for Shell.

Shell Names van Beurden as Surprise Choice for CEO

The Big 3 carmakers get plenty of press, but what about the carmaker makers? Enter Johnson Controls, a deceptively under-recognized name for its contribution to one of the most consumer-focused industries.

Johnson Controls (JCI) makes much of that cushy seat-foam that lets you ride in cars in comfort. The company is the world's largest supplier of "seating solutions," a segment that pulled in $15.5 billion in sales for the company in 2012. Johnson Controls also makes products tagged to the construction industry such as heating, air-conditioning, ventilating and security systems.

The company has broadened its reach well beyond its roots. In 1885, Warren Johnson, developer of the first electric room thermostat, founded Johnson Controls to sell his invention. Johnson Controls was also first to market with lithium ion batteries for hybrid cars, and is currently the biggest supplier for battery technology for vehicles. It also makes driver information display panels, floor consoles and those garage-door clickers that are integrated to the interior of the car.

You can't tell by the company's name what it does, exactly. CHS Inc., however, has its hands in a wide range of lucrative industries: petroleum products, chemicals, food and financial services. The company is owned by United States agricultural cooperatives and has been ever since it was founded in 1929 as the North Pacific Grain Growers. In 2003, it changed its name from Cenex Harvest States Cooperatives to CHS Inc., keeping Cenex as the name for its energy business, and offering preferred stock and non-voting ownership to investors.

Today, the company is not necessarily the No. 1 player in any of the categories it's involved in, but sweeps in at second or third place in a variety of categories. CHS is the nation's third largest U.S. grain exporter, and the third largest U.S. propane retailer. It has a joint venture with Ventura foods, a major manufacturer of bulk margarine. And while it is by no means up there with the Exxons of the world, CHS sells more than 3 billion gallons of refined fuels such as gasoline and diesel.

(Pictured is CHS's propane innovation from weed control to irrigation.)

It's got a pretty hands-off name, but United Technologies (UTX) is a manufacturer with many arms, and it oversees some of the U.S.'s most prominent brands. Sure, Boeing (BA) and Airbus make the news when they win or lose bids, but United Technologies owns Pratt & Whitney, the company that powers many of the planes those companies produce. And, of course, we all know Otis, the iconic elevator brand, which is a United Technologies company too. Manufacturer Sikorsky is another part of United Technologies' profile. And while Sikorsky may not ring a bell, it made the famous Black Hawk helicopters for the U.S. military.

Even less sexy but more pervasive, perhaps, is United Technologies bread and butter -- its climate, controls and security unit. The division made up the largest portion of the company's net sales in 2012 -- $17.1 billion out of $57.7 billion total.

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The pharma industry has undergone consolidation, with companies forming even larger units to prepare for health care reform, when the government will become an even more powerful drug-purchasing competitor. So AmerisourceBergen signed a three-year contract with Express Scripts, which had just bought Medco Health. Both Express Scripts and Medco are pharma suppliers and consultants. In 2013, AmeriSourceBergen penned a deal with Walgreen (WAG) and Alliance Boots. The deal could give the triad the purchasing power to buy more generics than any other purchaser in the industry.

Archer Daniels Midland Company has been around since the turn of the century, when George Archer and John Daniels went in together on a business based on crushing linseeds. ADM (ADM) has flown under the radar aside from a press spike when it got caught up in a price-fixing scandal during the 1990s, which was featured in the 2009 movie "The Informant."

By that time, the company had somewhat righted its reputation -- it was ranked the Most Admired company in the food Industry on Fortune's 2009, 2010, and 2011 lists.

ADM is known primarily for its involvement in the corn industry, but its reach extends far beyond that. ADM still crushes linseeds and other oilseeds, for example. In fact, strong global demand for those products protected the company this past year from drought problems in the U.S. that hurt harvests and lowered levels on the Mississippi River, a major ADM shipping channel.

ADM is also one of the largest milling companies anywhere, processing 20 acres of wheat per-minute, all over the world. If you've got a sweet tooth, ADM is one of the largest cocoa product producers and owns roughly 16% of the ground cocoa market. If you raise pig, horse, fish or any of several other animals, ADM cranks out the corn- and soy-based products to feed them.

McKesson was around during the old days of the American medical industry. In 1833, John McKesson and Charles Olcott formed the company in New York, starting out stocking medical ships coming to port with chests full of herbs, roots and spices from Pennsylvania Shaker communities.

Medical services, of course, have come a long way, and so has the company, which is now the largest pharmaceutical distributor on the continent. McKesson (MCK) peddles more than 150,000 medical-surgical products, including bandages and exam tables, and, it claims, offers healthcare solutions that touch "more than 160 million covered lives."

No more a conduit for Shaker spices, the industry today involves selling a much murkier product called "health solutions," which guides clients through the coverage levels they should offer, among other things, and "provider technologies," which aim to help clients deal with the digitization of medical records. Over half of all "health systems" in the United States use McKesson's technologies in this category. It's lucrative -- McKesson nets more than $123 billion in annual revenue.

Also, McKesson is building a medical robot army. Every year, according to the company, "More than 300 Robot-Rx pharmacy robots deployed in North America dispense 350 million medication doses error-free." The future of medicine, ladies and gentlemen.

Lurking behind the health care debate are, of course, the companies that provide health care. Though it sounds like some kind of futuristic supercontinent, Humana (HUM) is actually the fourth largest provider of health care in the United States, with nearly 30 million policyholders.

The company, with its headquarters in Louisville, Ky., is poised to thrive as health care reform shapes the industry. Humana brought on 2,900 new care management professionals in 2012. Though costly, the price of that and other operational solutions should be offset by other areas in which the company made a profit. For example, the flu, though bad for your respiratory system, was good for Humana's bottom line. Incremental costs from increased hospital admissions, thanks to the flu, should earn Humana $75 million for 2012 and 2013.

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