Exxon's Problem of Riches

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Rex Tillerson (Tillerson), Exxon’s new CEO rejected the allegations of price gouging and said that market demand supply dynamics were responsible for high oil prices. He also advised consumers to be efficient in their use of gasoline. Tillerson mentioned that oil companies were investing their profits into new exploration projects and to increase existing refining capacity.

Lawmakers were also concerned about Exxon’s US$ 400 million retirement package payout to Raymond, who retired in December 2005. Many analysts felt that no honest measure of Raymond’s personal performance could justify this windfall. Ron Bonjean, spokesman for Dennis Hastert, speaker of the United States House of Representatives, said, “The speaker is very concerned about compensation packages given to executives like Raymond at a time when families are facing choices between putting food on the table and filling their car with gasoline.” ¹⁰

Regarding the controversy over Raymond’s compensation, Exxon clarified that it reflected Exxon’s strong business performance, the long-term nature of Raymond’s leadership, and his long and distinguished career with the company. Moreover, Raymond’s compensation was determined by the Compensation Committee of the Exxon board, which comprised of non-employee independent directors.

Analysts felt that Tillerson’s biggest challenge for the next four to five years would be to increase production output and find new oil reserves. They felt that without these steps, Exxon would be largely dependent on the increase in oil prices to improve its future earnings.

ADDITIONAL READINGS AND REFERENCES

1. Nelson D. Schwartz, “Exxon's challenge: topping itself,” www.money.cnn.com, April 3, 2006.
2. Nelson D. Schwartz, “The Biggest Company in America... is Also a Big Target,” www.money.cnn.com, April 3, 2006.
3. Ken Fountain, “EPA Awards Exxon Mobil,” www.web.baytownsun.com, April 12, 2006.
4. “The Pit Bull of Public Relations,” www.businessweek.com, April 17, 2006.
5. “Dorgan Calls ExxonMobil CEO’S $400 Million Retirement Package “Shameful,” www.dorgan.senate.gov, April 18, 2006.
6. “ExxonMobil Baytown Recognized by EPA and DOE with 2006 Energy Star CHP Award,” www.csrwire.com, April, 18, 2006.
7. Robert Campbell, “Former Exxon Boss: Critics ‘Don’t Understand’ Oil,” www.today.reuters.com, April 19, 2006.
8. Andrew Cassel, “Driven Crazy by Gas Prices,” www.philly.com, April 23, 2006.
9. “Exxon to claim bigger cash pile than Microsoft,”www.rawstory.com, May 09, 2006.

[10] “Lawmakers Want to Know: Are Oil Companies Gouging?” http://seattletimes.nwsource.com, April 26, 2006.