February 17, 2016
Meet The Youngest Black CEO of a Public Company
She didn’t mean it was appalling that her brother, only 38 years old, had attained the top
spot at a publicly traded company, but that, by most accounts, he was only the 10th black businessperson to do so.
And she was right. There is a frustrating lack of diversity in the C-suites of corporate America, not just in racial terms, but in gender as well. Just 23 of Fortune 500 CEOs are women, and just five are black. But it is a problem that Joel Gay believes will improve over time as companies get more global.
“Ultimately, we’re all going to migrate to a global, multinational, multi-ethnic workforce,” Gay tells Yahoo Finance. “If you look at Energy Recovery, we’re very much a microcosm of General Electric (GE), or Schlumberger (SLB), or Dover (DOV), or any of these large diversified industrials who recognize that companies succeed through diversity.”
From a close look this past summer at the Fortune 500, the Executive Leadership Council, a membership organization for black business leaders, concluded that although no organization tracks this definitively, Gay is most likely the youngest black CEO of a publicly traded company. He is not the youngest ever—that was Ephren Taylor II, who in 2006 at age 23, became CEO of City Capital Corporation. But last year, Taylor was convicted of a $16 million Ponzi scheme and sentenced to 20 years in prison.
“The reality is that diversity in every industry appears to be a bottom-line issue,” says Roxane Gay. “Until there’s a financial imperative, companies are not going to respond. And you just wonder when they will be forced to do something. I think change is always something that either happens very quickly or very slowly. And when it comes to corporate diversity, I think we are clearly going to be taking the slow route.”
Gay, who also teaches literature at Purdue University and whose essay collection “Bad Feminist” was a New York Times bestseller, sees the same issues in her own field, but thinks it’s easier to fix in publishing than in business. “It’s easier to address this problem in the literary world, because amazing women writers and amazing writers of color are simply abundant, and editors choose not to publish them,” she says. “In the business world, I think the barriers are different and more invisible.”
Right now, Joel Gay is more focused on running Energy Recovery, which calls itself “the leader in pressure energy technology.” The small-cap, 24-year-old, San Leandro, Calif.-based company, which went public in 2008, plays in the oil and gas space but does not itself do drilling. It manufactures devices for the large energy companies that do. Its latest, released in 2014, is the VorTeq, a hydraulic pumping system for fracking that reroutes sand and chemicals to make the process cleaner and more efficient. In October, Energy Recovery signed a 15-year exclusive licensing deal with Schlumberger, the massive, $87 billion Dutch oil giant, to use the VorTeq in its operat
Joel Gay, the young CEO of Energy Recovery.
In its assessment of Energy Recovery’s 2015 third-quarter earnings, Credit Suisse wrote that there were “more teeth to the Schlumberger VorTeq agreement than initially appreciated,” and called the quarter “stellar” on the strength of the new partnership. Gay sees the deal as a huge achievement for the company, as it allows Schlumberger to “dramatically decrease the cost-per-barrel to frack a well.”
Gay joined Energy Recovery in 2012, and became its CFO in 2014. Prior to Energy Recovery, he worked at Aegion (AEGN) as CFO of its North America division, and comes from a finance background before that. (His sister divulges that Joel also was “a really good poet” before he turned to business.)
Oil prices have fallen steeply in recent months as sentiment about the overall market is negative. But Gay argues that his company, as a service-provider to the larger oil giants, is well situated to succeed in any kind of market cycle. “In a bear market, we can bring down the cost basis so operators can remain competitive, and in a bull market we can expand gross margins,” he says. “The entire industry is quite concerned with the depressed pricing of crude, despite the fact that we’ve been here before. But those that have the temerity and the human capital to invest heavily will come out of this, and when we return to a bull cycle, will be very well positioned.”
The market, broadly speaking, has agreed with him: Although Energy Recovery’s stock is down 9% this month (it’s trading at around $5.60 now), it’s up 88% in the last six, and 90% since Gay became CEO last April.