Apologies for the long post, but I think it's worth reading. We're all smart people here, so I thought it'd be a good idea to share a quick investigation & exercise I completed a few weeks ago. "We're all in this together", our management claims. While we have our own thoughts if they actually mean this or not, do their own wallets back up this claim?
If you hadn't already, I'd highly recommend every employee (in fact, every shareholder) of every public company read the company's proxy. Our's can be found below. In short, this document highlights Executive/Board Compensation vs. company performance, and discusses any conflict of interest that may exist. It's quite an enlightening document, so again, please check it out.
https://corporate.exxonmobil.com/-/media/Global/Files/investor-relations/annual-meeting-materials/proxy-materials/2020-Proxy-Statement.pdf
There's a couple things I'd like to highlight here regarding our director and executive leadership compensation:
We've heard time and time again that one of our most important financial goals is to preserve our dividend ($3.48/share in 2020), as a commitment to our shareholders. Let's not forget here - our executives, board of directors, and many leadership in our company are ALL shareholders. They're rewarded stock options every year, normally dependent on company performance. The proxy above highlights the # of shares our directors and executives own.
Let's start with our wonderful Board of Directors, who oversee the decisions our company makes and have a lot of the final say with our business. Page 27 of the statement highlights the # of shares our BOD own. Did the math, this total is 262,558 shares. Not too much, but a decent amount.
The more interesting data is on page 54, showing how many unvested restricted shares our executive leadership team owns. Combine this with the # of vested shares on page 27, we see that just our 5 executive leadership own about 4.1M shares of XOM. They'll claim that the shares are restricted, don't vest for a very long time, and therefore can't be cashed out. They're right, but one thing they won't mention, written amongst the print on page 53, is that they do receive dividend payments on restricted, unvested shares. That's a nice $14.3M in dividend divided up by just these 5 individuals. This doesn't count ANY of our other executives and high level employees that own stock but also receive a dividend, and finally, let's not forget Mr. Tillerson and his 2 million shares, earning him a nice $7M/year for helping us get into the mess the shareholders see we're in right now.
We love talking about how so many of our investors "depend on our dividend". Page 27 shows the largest shareholders of our company. Vanguard & BlackRock, two of the largest asset managers in the world, in total own over 15% of outstanding company shares. That's 636 MILLION shares of XOM stock, and $2.2B of XOM cash they're gonna be receiving this year from dividend. I'm sure these investors really need it. Oh and by the way, the CEO of BlackRock? Larry Fink. Some of you may remember his 2019 letter to the CEO's (https://www.blackrock.com/corporate/investor-relations/larry-fink-ceo-letter) describing the fundamental change required to shift away from investing in fossil fuel companies. Ha ha. We really love our shareholders unconditionally don't we Mr. Woods, more than our employees in fact! But we already knew that. Give money that we don't have to investors, and by the way these investors don't really like us anyway.
Our executives strive our "Pay for Performance" system, both to our shareholders and to us. In fact, PADP is strongly reinforced by them, and due to the business climate, they cut our 401k match, education reimbursement, and pay raises for the next few years (at least). If we're feeling the hit and losing our jobs, they should to. The $15M our board and executive team this year in JUST dividend payment is cash that's equivalent to 88 full time US employees (using a median 2019 employee pay of $173k) , these 88 employees amongst many more will learn of their layoffs this week.
XOM has been underperforming our competitors for a decade, and we've greatly suffered in 2020. The whole industry has, but even in the midst of COVID we're now a smaller company than Chevron by market cap. Wall Street is clearly not impressed by us (neither fiscally nor ESG-wise), but we continue to pay them and our own executives with handsome cash dividends. Cash that could have kept some benefits or saved some employees from being laid off, which are taking place because the company isn't performing and needs to be more cost competitive.
Darren & team, if we're really "all in this together", back it up with your wallet. Otherwise, drop the act. #cutthedividend
And to the rest of you that made it to the end, thanks for reading and hope you find it informative. I wholeheartedly wish nothing but the best for you and our true hardworking employees. I'm finding my fate out this week too, but I've come to terms with it and am ready to look forward if they let me go.