Lounge of Tomorrow - View Single Post - The random political thoughts thread (Part Deux)

Alex · 04-17-2006, 11:54 PM

Did some more poking around and it appears that the $150,000/day number refers to his 2005 income only, not 1993-2005. Most of the $51 million he made in 2005 came not in salary or bonus but in exercising previously granted stock options.

On tonight's Daily Show Jon Stewart said the total retirement package of $400 million (most of which is tied up in outstanding stock options as well as participation in the same pension plan that all Exxon people are part of) was equal to $150,000/day for every day Raymond worked for Exxon. This is neither true of his full run at Exxon (46 years) nor his time as Chairman (12 years). At $150,000/day that equals about 7 years. Still a lot of money, though.

What's interesting to me in looking deeper at this is how screwed up the general media is at reporting financial numbers. Headline after headline says he is getting a $400 million dollar retirement package. As near as I can the source of this number is a cobbling together of money mostly unrelated to his retirement and the biggest chunk of it is pretty much statutorily required.

Components of the $400 million number seems to be:

$4,000,000 - 2005 salary
$4,900,500 - 2005 bonus
$32,087,000 - 2005 restricted stock award
$7,484,508 - 2005 incentive plan payout
$450,800 - other compensation

You can argue that these are excessive and I'd generally support that notion. But they have nothing to do with his retirement. That is compensation for 2005, prior to his retirement. Also, the third item there is not actual cash payout, according to the proxy statement he can't sell any of those shares for five years so the value could go down significantly before then. That's about $48 million of the $400. The other expenses are mostly non-cash such as bodyguards, club memberships, cars, personal use of company aircraft.

Then there is this stuff:

$3,089,400 - Restricted stock dividends paid in 2005.
$21,212,022 - Exercised stock options in 2005.

Again, neither of these have anything to do with his retirement. They also have nothing to do with compensating him for work in 2005. This is the result of compensation given in previous years.

Then we have some pseudo-money:

$69,630,280 - unexercised stock options
$151,027,200 - value of previously granted restricted stock
$4,900,500 - future payouts from existing long-term incentive program

Again, nothing to do with either retirement or 2005 compensation. These are grants that accumulated in previous years. Approximately 1/3 Raymond's existing stock options are under water and by the time he can exercise it is possible they all would be or they could be worth much more than this amount. Same with the restricted shares which can't be sold for 5-9 years depending on grant date.

The incentive plan I can quite figure out but I believe it also derives from past years and not current years.

$98,437,831 - lump sum pension payout
$1,000,000 - post-retirement "consulting" fee
Other services exptected to be under $1,000,000 year

Finally, these are the only things in the $400 million retirement package that actually have anything to do with his retirement. The lump sum payment is part of the defined pension plan at ExxonMobil and the executives participate in the exact same plan as everybody else. The man has been an executive in the company for 46 and gets a huge payout. But this big piece of change was not a gift from the Board of Directors; there was absolutely no discression in its receipt. The consulting thing is a sham that most major companies do to "ensure a smooth transition" and the other services mostly have to do with continuing bodyguards, club memberships, and other personal services.

Sorry to go into such detail but I didn't really have another venue for it and the way the non-financial press covers these things always pisses me off. Yes, Raymond was paid a lot. But they've essentially screwed up the $400 million thing completely. Also, they act like this was all a surprise.

The man did not negotiate a retirement package and get a big old bear hug from the directors. If in January 2005 you had been told Raymond would retire in January 2006 you could put together almost the entire $400 million detailed here by looking at the public informatin in the last few proxy reports. The only uncertain spot would be the 2005 bonus and restricted stock grant.

I have no problem with the argument that the market has overvalued CEOs and chairmen (they have) but when people show so little understanding of what they are talking about it just distracts the discussion from where it should be.

04-17-2006, 11:54 PM	#146
Alex . Join Date: Feb 2005 Posts: 13,354	Did some more poking around and it appears that the $150,000/day number refers to his 2005 income only, not 1993-2005. Most of the $51 million he made in 2005 came not in salary or bonus but in exercising previously granted stock options. On tonight's Daily Show Jon Stewart said the total retirement package of $400 million (most of which is tied up in outstanding stock options as well as participation in the same pension plan that all Exxon people are part of) was equal to $150,000/day for every day Raymond worked for Exxon. This is neither true of his full run at Exxon (46 years) nor his time as Chairman (12 years). At $150,000/day that equals about 7 years. Still a lot of money, though. What's interesting to me in looking deeper at this is how screwed up the general media is at reporting financial numbers. Headline after headline says he is getting a $400 million dollar retirement package. As near as I can the source of this number is a cobbling together of money mostly unrelated to his retirement and the biggest chunk of it is pretty much statutorily required. Components of the $400 million number seems to be: $4,000,000 - 2005 salary $4,900,500 - 2005 bonus $32,087,000 - 2005 restricted stock award $7,484,508 - 2005 incentive plan payout $450,800 - other compensation You can argue that these are excessive and I'd generally support that notion. But they have nothing to do with his retirement. That is compensation for 2005, prior to his retirement. Also, the third item there is not actual cash payout, according to the proxy statement he can't sell any of those shares for five years so the value could go down significantly before then. That's about $48 million of the $400. The other expenses are mostly non-cash such as bodyguards, club memberships, cars, personal use of company aircraft. Then there is this stuff: $3,089,400 - Restricted stock dividends paid in 2005. $21,212,022 - Exercised stock options in 2005. Again, neither of these have anything to do with his retirement. They also have nothing to do with compensating him for work in 2005. This is the result of compensation given in previous years. Then we have some pseudo-money: $69,630,280 - unexercised stock options $151,027,200 - value of previously granted restricted stock $4,900,500 - future payouts from existing long-term incentive program Again, nothing to do with either retirement or 2005 compensation. These are grants that accumulated in previous years. Approximately 1/3 Raymond's existing stock options are under water and by the time he can exercise it is possible they all would be or they could be worth much more than this amount. Same with the restricted shares which can't be sold for 5-9 years depending on grant date. The incentive plan I can quite figure out but I believe it also derives from past years and not current years. $98,437,831 - lump sum pension payout $1,000,000 - post-retirement "consulting" fee Other services exptected to be under $1,000,000 year Finally, these are the only things in the $400 million retirement package that actually have anything to do with his retirement. The lump sum payment is part of the defined pension plan at ExxonMobil and the executives participate in the exact same plan as everybody else. The man has been an executive in the company for 46 and gets a huge payout. But this big piece of change was not a gift from the Board of Directors; there was absolutely no discression in its receipt. The consulting thing is a sham that most major companies do to "ensure a smooth transition" and the other services mostly have to do with continuing bodyguards, club memberships, and other personal services. Sorry to go into such detail but I didn't really have another venue for it and the way the non-financial press covers these things always pisses me off. Yes, Raymond was paid a lot. But they've essentially screwed up the $400 million thing completely. Also, they act like this was all a surprise. The man did not negotiate a retirement package and get a big old bear hug from the directors. If in January 2005 you had been told Raymond would retire in January 2006 you could put together almost the entire $400 million detailed here by looking at the public informatin in the last few proxy reports. The only uncertain spot would be the 2005 bonus and restricted stock grant. I have no problem with the argument that the market has overvalued CEOs and chairmen (they have) but when people show so little understanding of what they are talking about it just distracts the discussion from where it should be.
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