Remember that goofball who sat next to you in modern literature in college? Or the really smart girl two rows over in advanced chemistry? Look them up and take them out for little hunting. It worked out well for Exxon Mobil.
Rex Tillerson was a drummer for the band in the 1970s. On the trumpet was Jack Randall, a fellow engineering major. Three decades later on the advice of Randall, an oil and gas investment banker and a member of XTO’s board of directors, Tillerson, Exxon’s chief executive officer, invited XTO Chairman Bob Simpson to hunt quail on Exxon Mobil’s ranch in South Texas, said a person with knowledge of the events.
With some encouragement from Randall, Tillerson and Simpson started merger talks this past summer, said another person with knowledge of the matter. The discussions led to yesterday’s announcement of Exxon Mobil’s biggest deal in a decade, absorbing the largest producer of U.S. natural gas in a bet that U.S. emissions restrictions will spur demand.
Mitch Schnurman at the Star-Telegram notes that Exxon is also getting some good people in the XTO deal who might seem like a bargain:
For the past four years, as chairman and co-founder of XTO Energy, Bob Simpson earned at least $30 million in annual bonuses, a sum that occasionally provoked protests.
But I think that Simpson has been greatly underpaid.
It sounds absurd, especially in this economy, until you consider that Simpson started the Fort Worth natural gas company from scratch in 1986 and created an enterprise worth $31 billion. That’s what Exxon Mobil agreed to pay this week in an all-stock deal for XTO — a price that is higher than the market value of Dell, eBay, Lockheed Martin or FedEx.