President-Elect Trump has many conflicts of interest as he prepares to take office. It’s been a long time since the president-elect has been so deeply involved in a active businesses. His appointment of Rex Tillerson as Secretary of State creates another batch of conflicts for the administration and for Exxon-Mobil.
As is typical with many public companies, Exxon-Mobil grants large chunks of deferred compensation to its executives. Mr. Tillerson is eligible for $175 million is stock compensation when he turns 65 in March.
The board of directors of Exxon is faced with a tough choice of granting the compensation early, before he becomes Secretary of State. That would deviate from company policy and be perceived as granting a favor as he assumes one of the most powerful posts in government.
This is not new territory. Halliburton suffered a big loss in reputation when it granted early retirement to Dick Cheney when he was elected vice-president.
If it does not grant early vesting, then Exxon will be in the position of granting a fortune to the Secretary of State while in office.
Although Mr. Trump controls his organization and can largely do what he wants at whim, Exxon is a public company and subject to tigher rules on what it can do. According to the 2016 proxy statement, Mr. Tillerson held almost 2 million shares in the company. He was granted another $18 million in stock at the end of 2015.
Sources:
- Exxon Faces Dilemma on Rex Tillerson’s Pay by Bradley Olson and Liz Hoffman in the Wall Street Journal
- Politics and Conflicts of Interest