Hess. Resnick-Ault Jessica

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      Tina Davis

      Hess

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Hess

The Last Oil Baron

Tina Davis

Jessica Resnick–Ault

      Cover illustration: © iStock.com/tfoxfoto

      Cover design: Wiley

      Copyright © 2016 by Tina Davis and Jessica Resnick-Ault. All rights reserved.

      Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

      Published simultaneously in Canada.

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       Library of Congress Cataloging-in-Publication Data:

      Names: Davis, Tina, 1974– | Resnick-Ault, Jessica, 1980–

      Title: Hess: the last oil baron / Tina Davis, Jessica Resnick-Ault.

      Description: Hoboken, New Jersey: John Wiley & Sons, Inc., [2016] | Series:

      Bloomberg Press | Includes bibliographical references and index.

      Identifiers: LCCN 2015031845 | ISBN 978-1-118-92344-3 (cloth);

      ISBN 978-1-118-92346-7 (ePDF); ISBN 978-1-118-92345-0 (ePub)

      Subjects: LCSH: Hess, Leon, 1914-1999. | Businessmen – United

      States – Biography. | Petroleum industry and trade – United States.

      Classification: LCC HD9570.H47 D39 2016 | DDC 338.7/6655092 – dc23 LC record available at http://lccn.loc.gov/2015031845

      Preface

      Are there any questions?”

      The narrow conference room on the first floor of Hess Corporation’s 29-story downtown Houston office high-rise was quiet. About 100 people were gathered to see the denouement of a four-month battle between the oil company’s board and management and a hedge fund agitating for change.

      Chief Executive Officer John B. Hess, son of company founder Leon Hess, was facing shareholders in public for the first time since the fund run by Wall Street activist Paul Singer had announced it had acquired a sizable stake in the company and was seeking to alter its course, demanding it sweep out old board members, sell assets, and refocus its corporate strategy. John, newly stripped of his role as chairman, had agreed hours before to allow the dissident shareholder to appoint three nominees to the board after four months of acrimony capped by negotiations that stretched into the early morning. There were no questions.

      Thirty-eight minutes into a shareholder meeting that had been preceded by an increasingly nasty series of letters, battling websites, and name-calling between the hedge fund and the company, it was over. Faced with the biggest challenge to his family’s leadership since the company was founded in 1933, John Hess had blinked.

      That May morning in Houston, shareholders rode the escalator into the Hess conference room. The skyscraper, with more than 800,000 square feet of office space, gleams in the heart of Houston’s booming energy corridor. Shortly after it opened in 2010, as if in homage to its fossil-fuel–loving largest tenant, wind turbine parts fell off the building. The rooftop wind turbines were quietly removed.

      Pieces were falling from the Hess empire, too, and with little fanfare, nine board members were removed to make way for the new nominees and the new chairman. The CEO who took over four years before his father’s death had lost some grip on the company whose expansion he had been witnessing firsthand for all of his 59 years.

      The company had managed to continue being operated as a family venture through 80 years, large mergers, multiple missteps, and many triumphs. The brand that Leon Hess built from a single delivery truck in the Great Depression to an ubiquitous green-and-white logo along East Coast roadways, was no longer being run exclusively by the family and a board full of friends.

      What defined the company without the Hess family in full control? Just like wind turbines that were removed from atop the Houston office one day, would anyone notice the absence of a Hess at Hess?

      Chapter 1

      Hess Family

      Leon Hess’s family story is in many ways a well-worn tale of the American dream: an Eastern European Jewish immigrant comes to the United States, followed by other relatives, starts businesses to try to make a living, and leaves much of the old world behind. The family faced hardships and mishaps common from immigration in the early 1900s, including names distorted by officials who didn’t speak their language, housing in crowded immigrant neighborhoods, an inability to use skills from the old country, and bankruptcy. In the second generation, though, the story takes a wild departure: filled with a unique mix of Depression-era creativity, World War II logistical knowledge, and inspiration from a powerful mentor, the youngest son would reimagine his father’s failed business and establish himself as one of the richest men in the country.

      In the first decade of the 1900s, immigrant families – particularly Jewish ones – flooded New York and New Jersey, overflowing available houses, apartments, and tenements from the Lower East Side to the Jersey Shore and beyond. They joined the garment industry or started small businesses as tailors, milliners, and peddlers.

      The Hess family’s story is in many ways indistinguishable from dozens