Jim O’Brien, the 59-year-old chairman and CEO of Ashland Inc., announced last week he will retire from the company he has led since 2002. In his tenure as chief executive, O’Brien transformed Ashland from a petroleum refining company with holdings in highway construction and chemical distribution into an $8 billion specialty chemical supplier. One of its steadiest anchors throughout has been Valvoline, the lubricants business unit that he ran as president from 1995 to 2001 and which is increasingly important to Ashland’s bottom line.
Valvoline had sales of $2 billion in fiscal 2013 and pretax earnings of $330 million, and now moves about 13 million gallons of lubricants a month through retail, wholesale, international and do-it-for-me channels such as Valvoline Instant Oil Change centers. It accounts for roughly a quarter of its parent’s annual revenue, and 28 percent of its operating income.
During his time at Valvoline, O’Brien implemented a master brand strategy, and focused on boosting sales of high-value, premium products rather than gallon volumes alone. Moving on to the CEO spot at Ashland, O’Brien steered the parent through dozens of acquisitions and divestitures, the latest being an agreement to sell Ashland Water Technologies to a private investment fund for $1.8 billion.
That sale is expected to close before the end of the company’s fiscal year, which runs to Sept. 30. It will make the Valvoline segment even more critical to its parent’s health, with a one-third share of Ashland’s EBITDA.
Also following the sale, the Valvoline segment will no longer be officially called “Ashland Consumer Markets,” but will take the popular Valvoline name (which is what most people call it anyways). Ashland’s other two remaining segments will be Ashland Performance Materials, which sells resins, adhesives and elastomers, and Ashland Specialty Ingredients, which supplies chemicals for the personal care, pharmaceutical, food and beverage, coating and other industries.
O’Brien joined Ashland as an accountant 38 years ago, following an internship. He went on to work in operations, sales and marketing before being tapped for the job of running Valvoline. He also took roles at Ashland Distribution and Specialty Chemicals, prior to taking the chief executive’s chair 12 years ago.
As CEO, O’Brien’s compensation is detailed in Ashland’s annual proxy statement. His total compensation in fiscal 2013, including salary, stock awards, options and incentives, came to a shade under $7 million. The proxy also put a value of $12.3 million on his accumulated benefits in various company retirement plans.
His retirement will be effective Dec. 31, and Ashland’s board already has embarked on a formal search for a successor. The search committee, chaired by the board independent member Barry W. Perry, is said to be considering both internal and external candidates, and has engaged an executive recruiting firm to assist.
The company expects that O’Brien will remain on the board of directors for a limited time once the new CEO is named, to ensure a smooth transition. Ashland’s board also now includes Steve Kirk, who retired in 2011 as chief operating officer of Lubrizol Corp., following its acquisition by Berkshire Hathaway. Kirk, 64, was appointed to the Ashland board in November and confirmed by shareholders at the company’s annual meeting on Jan. 30. He serves on the Audit and Environmental, Health, Safety and Product Compliance committees.