Rex Tillerson, President-elect Donald Trump’s pick for U.S. secretary
of state, disclosed assets worth as much as $400 million in a federal
ethics filing that reflected investments spanning more than a dozen
nations.
If confirmed by the U.S. Senate, Tillerson will recuse himself for a
year from government decisions involving Exxon Mobil Corp., where he
served as chairman and chief executive officer until Jan. 1, according
to a separate filing posted by the Office of Government Ethics on
Wednesday. Because the company explores for oil and natural gas on six
continents, he may have a lot of recusing to do.
Tillerson stands to receive a cash payout of roughly $180 million
from Exxon in lieu of restricted stock awards that have yet to vest, the
company said Tuesday. In his ethics filing, Tillerson said that money
would be placed in an irrevocable trust that would be managed by an
independent trustee. In all, Tillerson’s disclosures reflect more than
$300 million in Exxon interests and pension benefits and between $28.6
million and $98 million in other assets. (Nominees disclose the value of
their assets within broad ranges.)
Tillerson’s filing says he will divest from 156 different entities within 90 days of his confirmation.
Cutting Ties
To avoid a conflict of interest with the multinational corporation he
joined in 1975 and led for 11 years starting in 2006, Tillerson also
needed to work out a resolution for the deferred compensation package
that typically ties former executives’ personal fortunes to Exxon’s
performance for a decade after they retire. Exxon’s board said it
consulted with federal ethics officials to ensure the agreement severing
Tillerson’s ties to the company was sound.
Such recusals typically require that “you remove yourself from the
chain of command of anything that would affect your former company,”
said Stan Brand, an attorney and government-ethics expert at Akin Gump
Strauss Hauer & Feld.
One example: Tillerson might have to recuse himself from Trump
administration decisions over whether to ease sanctions placed on Russia
for supporting separatists in eastern Ukraine and for the 2014
annexation of Crimea. Under Tillerson’s leadership, Russia became
Exxon’s single biggest exploration theater as the company amassed
drilling rights across tens of millions of acres, according to U.S.
Securities and Exchange Commission filings.
Confirmation Hearing
Tillerson’s confirmation hearing before U.S. senators may begin as
soon as next week. The 64-year-old Texan is no stranger to Capitol Hill,
having testified before congressional inquiries in the past decade on
topics as diverse as gasoline prices and the Deepwater Horizon disaster.
Tillerson could face a tough confirmation process, with Democrats
eager to push back on Trump’s nominees and a handful of Republicans
concerned about his longtime business ties to Russia at a time of
heightened tension between the two countries. Senate Democratic leader
Chuck Schumer called Tillerson and several other Trump nominees
“troublesome.”
Tillerson stepped down as Exxon chairman and CEO on Jan. 1 and was
succeeded by refining chief Darren Woods. The company typically retains
the services of ex-CEOs post-retirement to benefit from their
long-standing relationships with foreign oil ministers, political
leaders and dignitaries.
By cutting ties with Exxon, Tillerson is also eschewing
post-employment perks such as a private office and administrative
support enjoyed by his predecessor and mentor, Lee Raymond.
Exxon Shares
Tillerson directly owns 611,087 shares of Exxon, worth about $55
million according to Bloomberg calculations based on Wednesday’s close
in New York. He has an additional 2.026 million restricted shares, worth
$182 million.
Tillerson’s 38-page financial disclosure reveals he has a varied
portfolio of investments in companies based in more than a dozen
countries, including China, Japan, Germany, Taiwan, India and Brazil. He
also disclosed income of at least $20.5 million in 2016, including the
$10.3 million he received in salary, bonus and other compensation from
Exxon.
In cashing out his global holdings, Tillerson could apply for a
“certificate of divestiture,” which would allow him to defer
capital-gains taxes on certain assets he liquidated to comply with
ethics requirements. To qualify for deferral, which is available to
eligible appointees, his wealth would have to be reinvested in certain
approved investments, such as mutual funds.
It’s unclear how the roughly $180 million cash payment for the
restricted stock units might be treated for tax purposes, according to
specialists in executive compensation, accounting and government ethics.
The trustee who will manage that money will make payments to Tillerson
on a schedule “closely approximating” the timing Exxon would have
followed in letting the restricted units vest, according to Tillerson’s
filing.
Tillerson also will sell more than 600,000 shares he already owns in
North America’s largest oil explorer, abandon $4.1 million in cash
bonuses he would have been paid over the next three years and take a $3
million haircut on the restricted stock payout, the company said in a
statement dated Tuesday.
His severing of his relationship with Exxon isn’t unique — nor is it
the largest such separation in recent history. In 2006, before his
confirmation as U.S. Treasury Secretary, former Goldman Sachs Group Inc.
CEO Hank Paulson agreed to sell his $485 million stake in the
investment firm.
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