During Rex Tillerson's time, ExxonMobil used to make $30-$40 billion profit yearly and people used to talk of ExxonMobil as the greediest companies with so much profit. Profit was only 9% of gross revenue, so the "greedy" attacks were based on ignorance and lack of knowledge. But I am wondering - add the $30-$40 billion profit for 10-15 years and that is $400 billion. Where did all this money go? On a smaller scale, when people earn, most save the money for a rainy day. Where did past ExxonMobil profit money go? This money should be there somewhere, $400 billion cannot disappear??
18 replies (most recent on top)
@1fvi+16LrBrzi Really? I mean look who we promoted to manage it.
There were no projects to put the stock buyback money in at the time. Investors hate it when a company like XOM sits on a cash pile.
Rex And Lee didn't get golden parachutes. The $150 million for Rex and the $400 million were the numbers the company was required to disclose when they retired, and consisted of lump sum pension amounts, restricted stock he already had, etc:
2005 salary $4,000,000
2005 bonus 4,900,500
2005 Restricted stock awards 32,087,000
2005 Incentive plan payout 7,484,508
Other 2005 compensation 450,800
Value of previously granted restricted stock 151,027,200
Dividends paid on restricted stock in 2005 3,089,400
Value realized on ’05 option exercises 21,212,022
Value of unexercised options 69,630,280
Future payouts under incentive plan 4,900,500
Lump sum pension payout 98,437,831
Post-retirement consulting 1,000,000
TOTAL $398,220,041
Keep in mind that the restricted stock vests over a long term, 50% in 5 years, the rest in the latter of 10 years or retirement. Raymond had restricted stock that didn't fully vest until 2015. Tillerson's final compensation was made up of similar items. Rex did make out really well when his restricted stock had to be turned into cash when he became Secretary of State. That meant he missed the big drop in value over the last year or two.
: @1fvi+16LrBrzi Definitely!
The whole shale business unit in the Permian and Delaware divisions is so mismanaged.
Dividend
One positive on Rrrrr-rex. He could spot a f$cking m0r0n at least (bit late on it).
Lee R - the entire GWBush cabinet tuned in when he talked with Charlie Rose on PBS.
Ol' Lee and Charlie.
But it's clear the buybacks and other 'widows and orphans' activity is where the moneys went and will continue to go. It's not a technology or even industrial company mindset.
The fellow below describing the golden-egg goose has a good analogy.
So let us gorge ourselves now on that last smudge of foie-gras!
Apparently ExxonMobil put $210 billion into stock buybacks. Those buybacks had zero effect on stock price, so was the equivalent of stuffing 210 billion dollars into an incinerator.
If ExxonMobil had invested the $210 billion into projects, assets, or just a savings account, there would be no need to cancel projects or to lay off people now.
I think we do have some good Managers unfortunately mixed in with a lot of bad ones. Not all agreed with this and I feel bad for the ones that actually have integrity. They were not given much of a choice. It is the higher level that decided to handle things this way. They are too out of touch with people on lower levels and frankly do not care. But they will when they end up in a similar situation. We should never think we are so above other people because I’ve seen how fast people can lose it. That will be a day of reckoning.
Wow! Some real pent up angst on this thread! Many good points made though. It was never a merger. But is sounder nicer, and it makes no difference in the end. But it does speak to the “dishonesty “ issue. I think management’s credibility is pretty low right now. A little honesty and openness would go a long way.
Don’t forget that shareholders actually own the company. So it is their money they are getting in dividends and buybacks. But the goal of a public company is to stay in business to preserve and grow value for the owners. If management keeps injuring the goose, especially to pay out golden eggs to the owners, the goose eventually dies and there are no more golden eggs. Wise investments, good employee morale, and reasonable dividends and buybacks, all keep the goose healthy for the long run. Unfortunately this goose is on life support.
Rex himself walked away with a $180 million golden parachute, $50 mil of which was tax free.
I still cannot understand the cult of personality to those aholes
Lee Raymond earned his bonus? Oh, puh-lease! He was just in the right place at the right time, riding a wave of high oil prices, good refining margins and a buoyant chemicals market. He certainly didn't deserve the additional $400M - that was an obscene amount of money.
Many employees still think that the "merger" was a mistake. h-Mobil employees generally hate the Exxon management and controls culture that was enforced upon them, as well as the stifling of innovation, independent research and risk taking. h-Exxon employees generally think that Exxon paid well over the odds for Mobil (including the 2 for 1 stock exchange), just to get access to Mobil's gas reserves and resent the way that the new company simply dropped many h-Exxon products in favor of the h-Mobil counterparts based only on external perception (not better performance, more advanced technology, or lower manufacturing cost). Don't even get me started on the multi-million dollar golden parachute given to Lou Noto, just for him leaving the company within 2 years of the merger being completed.
Remember also that following the merger, they filled job positions from the top down - resulting in the creation of additional middle-manager roles (to soften the feelings of demotion) - and the loss of another generation of supposed "low performing" technical staff. I guess that was the writing on the wall that I missed.... that EM will always protect and keep managers at the expense of scientists and engineers (who actually do the work).
Stock buybacks to prop up the price - that’s what the money went to; more makeup.
Not reinvestment in growth.
Don’t think gorgon belongs in the same sentence as XTO or kearl. It’s a cash machine (at a return similar to our cost of capital 8%) with low marginal cost. Kearl and XTO are 0 to negative % returns, high cost, and eating us alive in a low price environment.
@beu+16LrBrzi, I agree with everything you said but...it was not a merger. Exxon bought Mobil. hMobil employees don't like to hear that, but that's exactly what it was. I know.
Lee Raymond earned his bonus. The merger of the two companies created massive value and synergies, resulted in productive period of 25% ROCE. Under Rex, there were numerous missteps (XTO, Kearl, Gorgon) and geopolitical pressures (Russian boycott, Obama pulling troops from Iraq) that led to loss of earnings and finally this period where we leveraged (borrowed money) to pay dividends. At end of Rex’s reign, ROCE dropped to 8% and we started borrowing money to pay dividends. Darren inherited that mess from Rex, tried to fix it with re-structuring, and then initiated this huge growth program. Now Darren seems unwilling to budge on growth and dividends despite complete loss of demand. So stopping slamming Lee, when we actually need his brilliance back at the helm.
Dividend and buybacks. The buyback stopped years ago but we’ve been borrowing to pay the dividend since 2015. So where is all the money going? To the shareholders through dividend payments. When you have a rainy day maybe you stop borrowing to pay the dividend? But then the execs wouldn’t get any money out of their RSUs.
@OP+16LrBrzi - don't forget that Rex's predecessor walked away with a $400M bonus for his "inspired leadership through and after the merger". It still makes me sick.
Wasn’t a lot on stock buybacks?