ExxonMobil and Rex W. Tillerson will cut all ties to comply with conflict-of-interest requirements associated with Tillerson’s recent nomination to lead the US State Department.
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Image of Tillerson, from Exxon. |
Yesterday (3 January), Exxon’s board of directors reached an agreement with the former chairman and CEO that states if Tillerson is confirmed as Secretary of State, the value of more than 2 million deferred ExxonMobil shares that Tillerson would have received over the next 10 years, will be transferred to an independently managed trust and the ExxonMobil share awards would be cancelled. The deal was developed in consultation with federal ethics regulators.
According to the supermajor, the trust would be prohibited from investing in ExxonMobil and the trustee would manage the assets consistent with government ethics rules. Payments to Tillerson from the trust would be subject to the same 10-year schedule that the cancelled awards would have had if they had continued in place.
The agreement would also see Tillerson surrender entitlement to more than US$4.1 million in cash bonuses, scheduled to pay out over the next three years, and other benefits such as retiree medical and dental benefits, and administrative, financial and tax support.
The one-time payment to the trust would be equal to the value of Tillerson’s cancelled shares based on a volume-weighted average price per share. Consistent with guidance from federal ethics regulators, the value would be reduced by about $3 million, Exxon said.
The trust would include forfeiture rules that would prohibit Tillerson from working in the oil and/or gas industry during the 10-year payout period. Rules, per the trust, dictate that in the event of forfeiture, the money would be distributed to one or more charities involved in fighting poverty or disease in the developing world. Neither Tillerson nor ExxonMobil would have any control over the selection of the charities.
According to Exxon, the net effect of the agreement is a reduction of approximately $7 million in compensation owed to Tillerson. Tillerson retired on 31 December, with more than 40 years of service with the company.
Separate to the agreement with ExxonMobil, Tillerson has also committed to the US State Department that, if confirmed, he would sell the more than 600,000 shares in ExxonMobil he currently owns.
US President-elect Donald Trump nominated Tillerson to be the next Secretary of State on 13 December.
The next day (14 December), Exxon announced that Tillerson would step down from his role at the company, and appointed Darren Woods to take his place, effective 1 January 2017.
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