A New Hess Helming HessJoseph Weber
When John B. Hess got married 10 years ago, he made an unusual choice for best man: his father. Friends saw it as another sign of how large Leon Hess, longtime head of Amerada Hess Corp., looms in his son's life. But now that John, 40, has taken the chief executive's post from his 81-year-old dad, oil-patch executives wonder whether young Hess will remain in Leon's very long shadow.
Tapped on May 3 to take the chairman and CEO's post at the family-controlled company, John Hess probably still will deal a lot with Dad. The tough-minded oilman who built Hess from a tiny home-heating concern into a global oil company still controls 12.9% of Hess stock, compared with his son's 1.7%. He continues to chair the board's executive committee. And although Leon is giving up the corner office in Hess's New York City headquarters, he's still likely to come by daily. Says Eugene L. Nowak, oil analyst with Dean Witter Reynolds Inc.: "Leon is not going to fade away."
MODEST REBOUND. That could be a problem, since change may be what Amerada Hess needs. The company has been struggling with erratic sales and profits for the last five years. Hess showed a $268.2 million loss in 1993, as sales dipped to $5.9 billion. Last year's rebound was modest: a $73.7 million net on $6.7 billion in sales (chart). In 1995's opening quarter, Hess earned just $25.2 million on $1.98 billion in sales, down from last year's $83.7 million gain on sales of $1.87 billion.
John Hess, who pumped gas as a youngster at Hess stations, is expected to seek more solid footing. A 1977 Harvard University MBA graduate, he has already done a six-month study aimed at boosting profits. Soon he'll implement changes, a Hess spokesman says. He'll likely call for aggressive cuts in $3.7 billion in debt left over from a costly three-year capital-spending program. Both Hesses declined to be interviewed.
Hess may have to proceed carefully, if he wants to undo moves by his father that have depressed earnings. For instance, he may seek partners to help shoulder the cost of Hess's giant Virgin Islands refinery. The facility, recently upgraded for about $1 billion, is the pride of the elder Hess. But it has suffered from weak gasoline prices. Grouses one investment manager who is steering clear of Hess stock: "They dumped a lot of money on St. Croix, which turned out to be a bad investment."
Friends call John Hess a quick study. As senior executive vice-president, he has overseen exploration and production operations, helping develop fields in Canada and the Gulf of Mexico. Although unschooled in geology, he's as conversant with oil-field science as staffers, associates say. David F. Chavenson, a Harvard classmate and treasurer of a Hess joint-venture partner, Oryx Energy Co., describes Hess as "very thorough, very smart."
John Hess has slogged around foreign oil fields with his father since he was 7. Fluent in Arabic and Farsi, he studied in Beirut as a Harvard undergraduate and later grew close to some Middle Eastern oil ministers. At B-school, he played down his moneyed background. "John doesn't jump off the page at you. He's very thoughtful," says Lorillard Inc. Chief Andrew H. Tisch, another former classmate and frequent tennis partner.
STRONG HAND. Young Hess shares his father's passion for the family business, working the same long hours. And like his father, who owns the New York Jets, he leaves coaching to the pros, even though he regularly attends home games. "Neither one of them has ever sent in a play," says Jets President Steven L. Guttman. But he's always deferential to his father. One analyst recalls him obliging Leon's request at one meeting to fetch Cuban cigars for visitors.
If Amerada Hess is to put some better numbers on the board, young Hess may have to play a stronger hand with his father. Leon Hess routinely deferred to his own father, Mores, the company founder who stayed on the job until his death at age 92 in 1965. Each morning, Leon brought his father the checks to sign. That, at least, is one task John Hess may be spared.