The Director Compensation Project: Exxon Mobil (XOM)
This post is part of an ongoing series that examines the way stock exchange independence rules relate to director compensation. We are for the most part including companies from 2017’s Fortune 500 and using information found in their 2017 proxy statements.
NASDAQ and the NYSE have similar rules with respect to director independence. NYSE Rule 303A.01 requires that each listed company’s board of directors be comprised of a majority of independent directors. A director does not qualify as “independent” if he or she has a “material relationship with the company.” NYSE Rule 303A.02(a). In addition, the director is not considered independent under NYSE Rule 303A.02(b)(ii) if the director received more than $120,000 in direct compensation, other than director’s fees, during any of the previous three years. The NYSE imposes a higher independence standard for directors serving on the company’s audit committee by requiring them to comport with Rule 10A-3 (C.F.R. §240.10A-3) (see Rule 303A.06) and requires consideration by the board of directors of certain specified factors in designating directors for the Compensation Committee. See NYSE Rule 303A.02(a)(ii).
Finally, as the Commission has noted with respect to director independence:
All compensation committee members must meet the general independence standards under NYSE’s rules in addition to the two new criteria being adopted herein. The Commission therefore expects that boards, in fulfilling their obligations, will apply this standard to each such director’s individual responsibilities as a board member, including specific committee memberships such as the compensation committee. Although personal and business relationships, related party transactions, and other matters suggested by commenters are not specified either as bright-line disqualifications or explicit factors that must be considered in evaluating a director’s independence, the Commission believes that compliance with NYSE’s rules and the provision noted above would demand consideration of such factors with respect to compensation committee members, as well as to all Independent Directors on the board.
Exchange Act Release No. 68639 (Jan. 11, 2013); see also Exchange Act Release No. 68641 (Jan. 11, 2013).
Independent directors are compensated for their service on the board. The amount of “total compensation” can be seen from examining the director compensation table from the (NASDAQ:XOM) Exxon Mobil 2017 proxy statement. According to the proxy statement, the company paid the directors the following amounts:
Name
Fees Earned or Paid in Cash ($)
Stock Awards ($)
Option Awards ($)
All Other Compensation ($)
Total ($)
M.J. Boskin
110,000
193,000
0
239
303,239
P. Brabeck-Letmathe
110,000
193,000
0
239
303,239
A.F. Braly*
65,879
719,840
0
147
785,866
U.M. Burns
110,000
193,000
0
239
303,239
L.R. Faulkner
120,000
193,000
0
239
313,239
J.S. Fishman
73,957
193,000
0
151
267,108
H.H. Fore
110,000
193,000
0
239
303,239
K.C. Frazier
110,000
193,000
0
239
303,239
D.R. Oberhelman
110,000
193,000
0
239
303,239
S.J. Palmisano
120,000
193,000
0
239
313,239
S.S Reinemund
115,989
193,000
0
239
309,228
W.C. Weldon
110,000
193,000
0
239
303,239
*Ms. Braly joined the board in 2016. Ms. Braly received a one-time grant of 8,000 restricted shares upon first being elected to the Board in May 2016. The valuation of this award is based on the market price of $89.98 on the date of the grant
Director Compensation. During 2016, the board held 12 meetings. Roughly 93% of the directors attended the board and committee meetings in which no single director attended less than 75% of the meetings. Only the non-employee directors were reimbursed for expenses incurred from attending the board meetings.
Director Tenure. The longest tenure has been held by Michael Boskin, who has been on the board since 1996. Mr. Boskin currently serves at the CEO of Boskin & Co. Susan Avery holds the shortest tenure, as she began serving as a director in 2017. Ms. Avery has previously served as the President and Director of Woods Hole Oceanographic Institution, however, currently does not hold any other board or executive positions.
Executive Compensation. R.W. Tillerson served as CEO until the end of 2016 in which he was succeed by Darren Woods. Mr. Tillerson’s salary was $3,167,000 with a $1,670,000 bonus and $19,731,375 stock award. Mr. Tillerson’s total compensation for the 2016 year equaled $27,393,342. Mr. Woods total compensation in 2016 was $3,805,931, with a salary of $1,000,000, bonus of $1,232,000 and stock award of $12,014,215. M.J. Dolan has served as Senior Vice President since 2008 and earned a total compensation of $15,645,735 during the 2016 fiscal year. Mr. Dolan received a salary of $1,385,000 with a $1,145,000 bonus and $10,874,180 stock award.