ExxonMobil’s well-paid directors

By Gary Jacobson

September 30, 2007 at 7:15am

Outside directors of ExxonMobil are among the highest-paid board members in the world. Each earned well over $300,000 in compensation from the giant oil company in 2006.

And that’s only part of the story.

Because of ExxonMobil’s strong stock, if the directors’ 2007 compensation were calculated based on today’s share prices, it would total about $500,000 apiece.

That may be one reason why ExxonMobil changed its non-employee director pay last week, reducing the annual award of restricted stock from 4,000 shares to 2,500 shares apiece, beginning next year. The company also increased cash payments to each director to $100,000 from $75,000, while eliminating smaller payments for some committee duties.

When ExxonMobil filed its annual proxy statement in April, it put the value of 4,000 restricted shares at $230,680, or $57.67 a share, about the price at the end of 2006. ExxonMobil stock closed Friday, the end of the third quarter, at about $92.50, making 4,000 shares worth $370,000. At current prices, 2,500 shares are worth about $231,000.

Directors are paid regular dividends on their restricted shares, but can’t sell them, generally, until they retire from the board.

At current prices, three directors (Marilyn Carlson Nelson, William Howell and Philip Lippincott) hold restricted shares worth more than $4 million. Nelson is CEO of Carlson Companies, Howell is chairman emeritus of J.C. Penney and Lippincott is the retired chair of Scott Paper and Campbell Soup.

Four other directors (Michael Boskin, James Houghton, Reatha Clark King and Walter Shipley) hold restricted shares worth $3.5 million or more. Boskin is a professor at the Hoover Institution, Houghton is former chairman of Corning, King is former chairman of the General Mills Foundation, and Shipley is retired chairman of Chase Manhattan.

When Sam Palmisano, CEO of IBM, joined the ExxonMobil board last year, he received a one-time grant of 8,000 restricted shares, like all of the company’s new directors. At the time, those shares were valued at $484,640. At today’s prices, those shares are worth $740,000.

Of course, the directors’ highly paid part-time jobs go with the territory. They are helping lead one of the largest commercial enterprises in the world. At the end of third quarter, ExxonMobil had a market cap of about $510 billion, equal to the combined market caps of Microsoft, Google and eBay.

It can be easy to get excited about high tech, but never under estimate the power of $80-a-barrel oil.

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