Exxon CEO Tillerson's Pay Rises While Peers' Wallets Take Hit

Exxon CEO Rex Tillerson's compensation rose 10 percent in a year when the most of his oil and gas peers watched their salary, bonuses and stock grants take a dive.

Big multimillion compensation packages for oil execs rarely create warm and fuzzy feelings for the industry. In tough economic times -- like the ones we're living in -- Bunyanesque compensation triggers all sorts of angry thoughts and opposition from shareholders, politicians, analysts and regular folks alike.

Put the bad feelings aside for a moment. Exxon reported record profits as oil prices skyrocketed to $147 a barrel in the first half of the year. Then the bottom dropped out, oil prices plummeted and so did Exxon's shares.

Oil and gas companies suffered from shrinking demand for oil and the more than $100 freefall for a barrel of crude -- some worse than others.

Should Tillerson be rewarded or take it on the chin in a year of record profits and falling share price -- both of which were directly tied to the price of oil?

It makes sense to scale back a bit in these bad economic times. While $23.9 million is a ridiculous sum of money, Exxon has managed to keep its financial house in order and has more than enough cash to swoop in a buy smaller independent oil and gas companies. I would agree with a recent post from the Financial Times Energy Source blog, that the compensation package for Conoco's CEO, which fell, is still insanely high considering the financial health of the company.

Here's what Tillerson and some of his peers received in 2008. Considering a recent forecast from the U.S. Energy Information Administration that U.S. petroleum-based gasoline consumption will fall 6.9 percent to 345.7 million gallons in 2009, these CEOs might just earn their paycheck.

• Tillerson's total compensation package rose 10 percent to $23.9 million in 2008. That includes a $1.87 million salary, $4 million bonus -- half in cash with the rest deferred pending future earnings, stock grants valued at $17.6 million in late November and $446,000 of additional bennies like personal use of company planes, life insurance and security. His salary is to rise another 10 percent to $2.06 million this year. Exxon reported $45.2 billion in profits and its stock price fell 15 percent.
• Chevron Chairman and CEO David O'Reilly's total compensation package fell 12 percent to $13.8 million. O'Reilly received fewer stock options and shares granted under Chevron's performance program because the company didn't do as well as its peers. Chevron reported $23.93 billion in annual profits. The company saw its 2008 fourth-quarter profits plunge 38 percent from the previous quarter to $4.9 billion.
• ConocoPhillips Chairman and CEO Jim Mulva's total compensation fell about 42 percent to $29.4 million in 2008. The drop was largely due to a decline in stock awards, which fell to $10.4 million from about $38 million in 2007. Conoco's shares fell about 40 percent in 2008. The company announced 1,300 job cuts in January, reduced capital spending in 2009 by 37 percent and posted a large fourth-quarter loss due to $34 billion in asset writedowns and falling oil prices.
• Marathon Oil CEO Clarence Cazalot saw his compensation fall 20 percent to $11.6 million. The company's net income fell 10.8 percent from 2007 and its total shareholder return fell 54 percent.
• Occidental Petroleum Chairman and CEO Ray Irani saw his compensation fall 18 percent to $49.92 million. Much of his compensation comes from performance-based equity grants of $15.7 million and performance-based cash grants of $29.2 million. In a WSJ CEO pay survey, Irani had the second-highest total compensation. He also collected some $200 million last year from long-term incentive awards and by exercising stock options. Occidental's 2008 profits rose 35 percent to $6.8 billion on sales of $24 billion.