By Bradley Olson and Damian Paletta
Exxon Mobil Corp. has awarded former Chief Executive Rex Tillerson a $180 million retirement package as the company moves to break financial ties with President-elect Donald Trump's nominee for secretary of state.
If Mr. Tillerson is confirmed, Exxon will transfer the equivalent value of two million unvested shares that he was set to receive at his previously expected retirement in March into a trust, according to the company.
The decision will allow Mr. Tillerson to sell off all of his remaining shares in the company, astep he has committed to make if he is confirmed, according to Exxon. Currently, he holds more than 600,000 vested shares worth about $54 million. The deal amounts to about $7 million less than the compensation package that he would have received if he hadn't been tapped for the post.
Mr. Tillerson stepped down as Exxon CEO Jan. 1. Before his nomination, he was set to receive more than $180 million in shares that would have vested over a decade. The company consulted with federal regulators before agreeing to terms.
The trust would be prohibited from investing in Exxon, and payments to Mr. Tillerson would be subject to the same 10-year schedule as his unvested stock, according to the company. He will be prohibited from working in the oil and gas industry during the 10-year payout period. If he does return to the energy industry, the remaining funds in the trust would be forfeited and donated to charities "involved in fighting povertyor disease in the developing world," according to Exxon.
By allowing Mr. Tillerson to fully divest himself of his company holdings, Exxon may alleviate concerns that he could personally benefit from State Department actions that help his former company. But the decision may open Exxon to criticism that it is granting Mr. Tillerson millions of dollars just as he is poised to take a post in which he could have influence over the company's business success.
"Exxon is trying to make the best of a tough situation," said Charles Elson, a professor of governance at the University of Delaware. "It would be unfair to take it all away, but vesting his shares would create a lot of problems. They're trying to give him value for what he accomplished and also protect the company. There's no easy solution to this."
Mr. Tillerson couldn't be immediately reached for comment. He is scheduled to appear before the U.S. Senate Foreign Relations Committee for two days of confirmation hearings beginning Jan. 11.
The severance package is likely the first of many such disclosures by Mr. Trump's potential cabinet appointees, many of whom are wealthy current or former business executives. In addition to Mr. Tillerson, others include Wilbur Ross, the billionaire banker and restructuring specialist, whom Mr. Trump tapped to be secretary of commerce, and Gary Cohn, the former second in command at Goldman Sachs Group Inc., whom Mr. Trump would like to lead the National Economic Council.
Exxon is seeking to avoid the scrutiny that dogged Halliburton Co. when Dick Cheney, who had been the company's chief executive, was elected vice president and joined George W. Bush's administration in 2000. Exxon shares have risen about 5% since the election.
Halliburton's board granted Mr. Cheney early retirement, a step that allowed him to receive a departure package worth about $20 million. Hesold shares of the oil-field-services company worth more than $30 million during the campaign but retained hundreds of thousands of stock options and sold them gradually during his time in elected office. Any profits from the sales were donated to charity, Mr. Cheney's office said at the time.
On Sunday, Exxon elevated heir-apparent Darren Woods to the chief-executive role. Mr. Woods is a Kansas native who presided over the company's refining operations.
Liz Hoffman contributed to this article.
Write to Bradley Olson at Bradley.Olson@wsj.com and Damian Paletta at firstname.lastname@example.org
(END) Dow Jones Newswires
January 03, 2017 23:19 ET (04:19 GMT)
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