Chevron CEO John Watson will step down by next month, new report says, with no successor yet named

Aug 22, 2017, 10:49am PDT Updated Aug 22, 2017, 11:00am PDT
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Riley McDermid Digital Producer San Francisco Business Times

The chief executive officer of Chevron Corp. will step down by next month, the Wall Street Journal reported Tuesday, as the energy behemoth looks to change course amid an increasingly fractious oil sector.

The San Ramon-based company has battled with a whipsawing stock price that has seen its shares fall 10 percent since the beginning of the year. CEO John Watson, 60, has lead Chevron (NYSE: CVX) since 2009



Employees work on a storage tank inside the Chevron Corp. Richmond Refinery in Richmond,… more

David Paul Morris

Shares of the company ticked up slightly on the news in midday trading Tuesday.

Chevron declined to comment. The Journal cited people familiar with the matter as saying that a Chevron vice chairman, Michael Wirth, 56, is viewed as Watson's most likely successor because of his background in oil refining.

"Chevron directors see Mr. Wirth’s years of experience wringing costs out of big plants that process fuel and chemicals as a critical need in a new era for oil markets defined by low prices, the people said," the paper reports.

"Such a background has grown far more important for executives at the world’s largest oil companies as they seek out investment opportunities that pay back quickly and move to allay investor concerns about when demand for crude will peak."

The Journal reports that Watson decided to step down "well before" the company's mandatory retirement age to allow for new leadership to become well established and cited sources familiar with the matter as saying the departure is "amicable."

During Watson's tenure, Chevron's financial results had enjoyed a boost for most of the time, with the company's shareholder returns climbing 80 percent since 2010. The energy giant's growth also outpaced rivals like Exxon (NYSE: XOM) and Shell (NYSE: RDS.A).

But was hit hard by dropping oil prices and has had to finance its dividend payments with equity for the last four years, leading it to be dubbed "the worst stock in the Dow" by some market watchers earlier this summer.

"The divergence of the price of oil relative to Chevron's stock price has never been greater, which indicates the stock is overvalued," wrote Robert Riesen, an energy blogger at Seeking Alpha, in the middle of June. "My two-stage discounted cash flow analysis also indicates that the stock is overvalued, even in a scenario where the price of oil increases considerably over the next five years."