posted by admin on 02/05/06
The move makes ADM, a commodity powerhouse with about $36 billion in revenue in its latest fiscal year, the largest publicly traded U.S. company headed by a woman.
DECATUR, Ill. -- Archer-Daniels-Midland Co., placing a big bet on the business of turning farm crops into fuel and chemicals, shattered company tradition by appointing a woman and energy-savvy outsider as its new CEO.
After a seven-month search, directors of the grain-processing giant here named 53-year-old Patricia A. Woertz, a former executive vice president at Chevron Corp., as chief executive officer, president and a director. She succeeds G. Allen Andreas, 62, who will remain chairman.
The move makes ADM, a commodity powerhouse with about $36 billion in revenue in its latest fiscal year, the largest publicly traded U.S. company headed by a woman. It also ends the lock of the storied Andreas family on the CEO post at ADM. That lock stretches back to 1970, when Mr. Andreas's uncle began turning an obscure soybean crusher into a commodity empire that moves crops and food ingredients across hemispheres.
Ms. Woertz is accustomed to the role of pioneer. Throughout her professional career, she has never taken a job previously held by a woman.
"I hope to represent [ADM] very well," she said, adding that the only scary aspect of moving to this central Illinois city is that "I don't know where the closest Starbucks is." Ms. Woertz currently lives in California, as do her three grown children and elderly parents.
In January, Ms. Woertz announced plans to take early retirement from Chevron, where she was in charge of refining and marketing operations for the fourth-largest U.S. corporation, as measured by revenue. At the end of her 29-year stint there, she was in charge of an operation with $100 billion in annual revenue, 19 refineries and 30,000 employees in 180 countries.
In picking Ms. Woertz, who has done business in such far-flung places as Kazakhstan and Venezuela, ADM is luring someone who knows how to turn a raw commodity into hundreds of products and can talk about it with Wall Street analysts as well as foreign dignitaries. ADM, which does business in 60 countries, generates nearly half of its sales outside the U.S. and is involved in everything from crushing soybeans in China to processing cocoa beans in Africa.
Still, ADM is a very different kind of company than Ms. Woertz is used to. Legions of farmers supply it with crops to make mostly food and beverage ingredients, usually a slow-growing, thin profit-margin business.
A big part of Ms. Woertz's assignment is to lead ADM's push into transforming crops into more profitable industrial products, most of which would be alternatives to goods now made from petroleum. With President Bush touting plant-derived ethanol motor fuel as one way to end America's addiction to foreign oil, bioproducts are suddenly hot in the Farm Belt. ADM rival Cargill Inc. is using corn and soybeans to make plastics and urethane foam for seat cushions. DuPont Co. is using corn to make an ingredient in fabric and carpet.
ADM, the nation's biggest maker of fuel-grade ethanol, has plans to greatly expand its annual production, which is currently one billion gallons. While only about 5% of ADM sales come from the ethanol, soaring prices for the renewable fuel are a big part of the jump this year in the company's profit and stock price.
Ms. Woertz, who was recruited for ADM by search firm Spencer Stuart, should be able to help ADM sort out the complex logistics of transporting more and more ethanol to oil refiners struggling to stretch their gasoline supplies. Her knowledge of refining may also give ADM more credibility with customers that are considering whether to use new crop-based products, such as paint, biodegradable plastics and biodiesel fuel.
"We are at the first generation of these products," Ms. Woertz said. "I think the future is quite bright."
Scientists have long known how to use enzymes and microorganisms to mine the carbon from carbohydrates to make industrial products. But for decades the technology didn't go very far commercially because fossil fuel -- hydrocarbon -- was a far cheaper carbon source. Now that oil prices have climbed roughly 35% over the past year, fermentation technology is becoming economical.
The United Nations Food and Agriculture Organization said this week that biofuels may supply 25% of the world's energy needs in 15 to 20 years. "This shift from using hydrocarbons to carbohydrates will revolutionize the agriculture industry," Mr. Andreas said. "To have someone with Patricia's background was an intriguing thought."
Until now, it would have been unheard of for such a high-profile oil executive to jump to an ethanol maker. ADM and the oil industry have had a long history of feuding over federal incentives for ethanol. But in August, President Bush signed legislation requiring for the first time that the oil industry use some renewable fuels to make motor fuel. As a result, the oil industry is beginning to look at ethanol as a critical ingredient instead of as an irritating competitor.
By joining ADM, Ms. Woertz is making Illinois the home of America's top two female CEOs. Chicago consumer-products giant Sara Lee Corp., led by Brenda Barnes, held the distinction of being the nation's biggest female-led company after Hewlett-Packard Co. directors forced out Carly Fiorina last year.
Ms. Woertz and Ms. Barnes are among 10 women in the top job at the nation's 500 biggest corporations, according to Catalyst Inc., a nonprofit New York group that researches women's issues. In 1995, none of the top 500 companies had a woman at the helm.
Ms. Woertz began her career as an Ernst & Young accountant after graduating from Pennsylvania State University. She entered the oil industry in 1977 at Gulf Oil Corp., which then merged with Chevron, and eventually became president of Chevron Canada Ltd., where she built up Chevron's refining and marketing operation.
Her post as an executive vice president at Chevron had made her a natural candidate to one day succeed Chevron CEO David J. O'Reilly. Her operation performed well, but her chances seemed to fade last year as some rival businesses fared better. Chevron slashed her 2005 bonus nearly 30% to $850,000 from about $1.2 million the previous year. Last year, Ms. Woertz's salary and bonus totaled about $1.5 million.
Ms. Woertz retired early from Chevron because she wanted to be a CEO and didn't think she would get the top job there. "I absolutely want to make a difference," she said. She will receive a pay package initially worth more than $10 million, including about $6 million in restricted shares, according to a person close to the situation. Ms. Woertz declined to discuss her pay package.
ADM's decision to go outside for a CEO reflects a big change in the makeup of a board that was quick to bow to the wishes of the Andreas family a decade ago. Mr. Andreas succeeded his uncle as CEO in 1997 in the wake of a price-fixing scandal that sent a cousin to prison.
Mr. Andreas, who wasn't a member of the board committee that selected Ms. Woertz, had loyally touted the CEO credentials of several top managers. How Mr. Andreas now adapts to the less powerful role of chairman is likely to be closely watched by others in the food industry.
"I will need his counsel," Ms. Woertz said, adding that she and Mr. Andreas intend "the handoff to be clean and crisp."
For his part, Mr. Andreas emphasized that he plans to stay actively involved. "I'm not considering this action here of adding Patricia to our team of leadership as my stepping aside from the business," he said. "This has been my company for all of my life."Write to Scott Kilman at email@example.com and Joann S. Lublin at firstname.lastname@example.org