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Tillerson, Exxon Mobil agree to part ways

January 4, 2017

Rex Tillerson, the nominee for US secretary of state, is severing ties with Exxon with a retirement package worth $180 million. But his vast wealth and business dealings have sparked fears about conflicts of interest.

Rex W. Tillerson Exxon Mobil CEO
Image: picture-alliance/dpa/R. Curry

CEO Rex Tillerson and Exxon Mobil have agreed to part ways, with a retirement package worth $180 million (about 172 million euros).

The deal comes one week before the US Senate is expected to launch confirmation hearings over Tillerson's nomination to become secretary of state in a Donald Trump administration.

The severance package will cost Tillerson millions of dollars compared with what he would have received had he worked until March when he reaches the company's mandatory retirement age of 65.

"The net effect of the agreement is a reduction of approximately $7 million in compensation owed to Tillerson," the company said in a statement late Tuesday.

The agreement was reached in consultation with federal ethics regulators in order to comply with conflict of interest requirements, according to the statement.

If confirmed by the Senate, Tillerson will give up more than 2 million shares of unpaid stock that was part of his pay package. In return, Exxon will make a cash payment, equal to those shares, into a trust fund to administered by a third party, according to a regulatory filing made on Wednesday with the Securities and Exchange Commission.

Tillerson, who has worked for Exxon for more than 40 years, would have received the payout from the company over a 10 year period had he stayed until March.

Barred from working in oil

The trust will not be permitted to hold shares in Exxon Mobil, and Tillerson will be barred from working in the oil and gas industry for the next 10 years. If he decides to return to the sector within the next decade, the money in the trust fund will be paid out to charities, as chosen by the trustee.

Tillerson's nomination for secretary of state creates myriad conflict-of-interest issues. Placing the funds into a trust fund is intended to ease concerns that decisions made by Tillerson as a member of the incoming administration could help him or his former colleagues.

Despite being highly regarded as a globe-trotting dealmaker for Exxon Mobil, Tillerson's nomination for secretary of state has been beset with controversy because of his close relationship with Russian President Vladimir Putin.

He has also been criticized for striking deals for Exxon Mobil that were at odds with US foreign policy.

Darren Woods, a 25-year Exxon veteran who had served as the company's president, became Exxon Mobil's CEO at the start of the New Year.

Tillerson began his tenure at Exxon as a production engineer right after graduating from college in 1975. He replaced longtime CEO Lee Raymond in 2006 and led the company through a turbulent time period, which included the 2008 financial crisis. A collapse in oil prices since mid-2014 has sharply diluted Exxon's profits.

bik/se (AP, AFP)