Sunday, April 16, 2006

Former Exxon CEO Gets $167.7 Million Golden Parachute

ExxonMobil can't afford a higher state Petroleum Profits Tax (PPT). They refuse to pay a $5.0 billion civil court judgment levied against them in 1994. But, according to an article in today's Washington Post (April 16th), they were able to afford a $167.7 million golden parachute for former CEO Lee R. Raymond upon his retirement (photo above left, courtesy of Business Week).

The compensation package consists of a pension valued at $98.0 million based on 43 years of service to the company, and a $69.7 million package, of which $48.5 million is salary, bonuses, incentive payments, and stock awards, and the other $21.2 million from exercising stock options. Exxon stopped the latter practice in 2001, but Raymond was apparently grandfathered. During his tenure, Exxon's value increased fourfold to $375 billion.

Exxon defended the package by citing Raymond's "outstanding leadership of the business, continued strengthening of our worldwide competitive position, and continuing progress toward achieving long-range strategic goals." Exxon added that Raymond's compensation is "appropriately positioned relative to CEOs of U.S.-based, integrated oil companies and other major U.S.-based corporations, particularly in view of the long-term performance of the company and the substantial experience and expertise that Mr. Raymond has brought to the job." (Translation: The other guys are doing it, so it's O.K. for us to do it, too.).

Let's get this straight. Oil is at $60+ per barrel, we're paying $2.70 per gallon for gas with $3.00 per gallon expected this summer, they give a former CEO a $167.7 million golden parachute, they refuse to pay a $5.0 billion civil court judgment levied against them in 1994 (appealed twice; last time $4.5 billion reinstated by Judge Holland plus $2.25 billion in accrued interest for a total outstanding judgment of $6.75 billion), and yet they claim they cannot afford to pay more production taxes and increase production and exploration at the same time? Who do they think they're kidding? If this isn't corporate piracy and plutocracy run amok, tell me what is?

The Alaska State Legislature needs to resist the all-out advertising and lobbying pressure applied by the producers and their flunkies. Go for the highest possible PPT, but insert an escape clause to exempt profits reinvested in new exploration and secondary recovery, as Governor Murkowski has suggested. SB305 looks the best. See my previous post, entitled "Proposed New Alaska Petroleum Profits Tax", dated April 9th, 2006, for a discussion on the three competing PPT proposals on the table now. Then contact your lawmakers and urge them to pass a PPT best reflecting the producers' ability to pay.

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