Rex Tillerson, the nominee of President-elect Donald Trump for secretary of state, is severing ties with Exxon Mobil through a $180 million retirement package one week before his Senate confirmation hearing begins.
Tillerson will surrender, if confirmed, all unpaid stock that was part of his pay package, more than 2 million shares. In exchange, the company will make a cash payment equal to the value of those shares to a trust to be overseen by a third party, according to a regulatory filing Wednesday with the Securities and Exchange Commission.
Because of the way the compensation is being dispensed, Tillerson will give up about $7 million, compared with what he would have been paid had he retired in March as he had planned to do before the nomination.
Tillerson, who worked for Exxon for more than 40 years, would have reached the company's mandatory retirement age of 65 by March, after which he would have received the payout from Exxon over a period of 10 years.
If Tillerson returns to the oil and gas industry within 10 years, the money in the trust would be paid out to charities of the controlling trustee's choosing.
With the appointment of Tillerson as secretary of state comes a host of thorny conflict-of-interest issues. The placing of the funds into a trust is intended to allay concerns that decisions made by Tillerson as a member of the Trump cabinet could help him or his former associates.
Darren Woods, a 25-year Exxon veteran who had served as the company's president, took over as CEO of Exxon Mobil at the start of the new year.
Tillerson began his career at Exxon as a production engineer straight out of the University of Texas at Austin in 1975. He replaced longtime CEO Lee Raymond in 2006 and led the company during one of the most turbulent periods in its history, which included the 2008 financial crisis and a collapse in oil prices since mid-2014 that has sharply diluted Exxon's profits.
John McCain Offers Sassy Response When Asked If He’d Support Rex Tillerson
Much like Donald Trump, former Exxon Mobil CEO Rex Tillerson ― the Republican president-elect’s choice for secretary of state ― appears well on his way to making Sen. John McCain’s (R-Ariz.) blacklist.
Asked by reporters Wednesday if he would support Trump’s nomination of the oil tycoon, a friend of Russia, McCain quipped: “Sure ― there’s also a realistic scenario that pigs fly.”
McCain stopped shy of promising to vote against Trump’s pick for America’s top diplomat.
Hoping to alleviate concerns about his ties to Russia in advance of an upcoming confirmation hearing, Tillerson met with lawmakers from both parties on Wednesday. McCain and Tillerson had a meeting scheduled for Wednesday afternoon.
And if his previous comments are any indication, McCain needs some serious convincing.
“I have concerns,” McCain told Reuters shortly after Trump announced Tillerson as his pick. “It’s very well known that [Tillerson] he has a very close relationship with (Russian President) Vladimir Putin.”
McCain has also spoken out against reported Russian cyberattacks against the United States, describing them as “an act of war” and calling for a Senate committee to investigate the hacks. He has described Putin as a “butcher, a murderer and a thug.”
In 2013, Putin awarded Tillerson the country’s Order of Friendship. And according to Kremlin spokesman Dmitry Peskov, Tillerson has met with the Russian president “several times” and acted “highly professional” during previous dealing with Kremlin representatives.
On Tuesday, Exxon announced it had cut all ties with Tillerson in order “to comply with conflict-of-interest requirements associated with his nomination as secretary of state.” If confirmed to Trump’s post, the former company chairman and CEO stands to receive company shares worth some $180 million.
Rex Tillerson talks tough on Russia in private Capitol Hill meetings
Next week, former ExxonMobil chief executive Rex Tillerson will testify for two consecutive days on every foreign policy issue under the sun. If he says the right things about Russia in public — as he has in private — Democrats likely won’t be able to prevent him from becoming the next secretary of state.
Tillerson has been meeting with Republican and Democratic senators this week ahead of his Jan. 11 and 12 Senate Foreign Relations Committee hearings. According to several senators and staffers I talked to who were in the Tillerson meetings, the businessman has gone out of his way to project a clear-eyed and tough message about how he views Vladimir Putin’s Russia, without committing to any specific policies the Trump administration might pursue.
“He said, ‘Look, I understand Putin and Russia is a playground bully and they only respect strength and you need to come from a position of strength to them or you are going to have a lot of problems,’” one senior Senate staffer who was not authorized to speak about the private meeting told me, paraphrasing Tillerson’s remarks. “He was at 30,000 feet and when pushed on sanctions, he wouldn’t fully endorse any particular direction.”
One senator who met with Tillerson, who did not want to publicly comment on the private meeting, told me that Tillerson made clear he understands the overall threat Russia poses to the United States and our allies. But Tillerson punted on all specific questions regarding the dispute between President-elect Donald Trump and the intelligence community over whether the Russian government interfered in the presidential election through hacking and other means.
“I said, ‘Do you see Russia as being involved in our elections? What are you willing to do about it? That’s my test for him,” the senator said. “The first thing he said basically is, “Let me get back to the Trump people.’”
Meanwhile behind the scenes, Republicans and Democrats continue to jostle over the Tillerson nomination. Democrats successfully negotiated a second day of hearings, hoping to conduct more vetting and drive more news about Tillerson ahead of a committee vote. But Republicans led by committee chairman Bob Corker (R-Tenn.) held their ground against Democrat demands that Tillerson provide his tax returns.
Tillerson met with the committee’s ranking Democrat, Sen. Ben Cardin (D-Md.), Wednesday morning and was scheduled to meet with other committee members Wednesday afternoon, including Sen. Cory Gardner (R-Colo.) and Christopher A. Coons (D-Del.). Coons told me before the meeting Wednesday that his vote would depend on what Tillerson says both in public and private on Russia.
“I want to know whether he has a clear-eyed view of Putin’s Russia, their aggression towards the U.S. in hacking our election, their aggression in Crimea and eastern Ukraine, their role in massacres in Aleppo,” Coons said. “If he’s going to be secretary of state, I need to hear clarity from him.”
Gardner told me he wanted similar assurances from Tillerson. “I want to understand how our alliances will be strengthened by the next administration,” he said.
Senators and aides are also poring over reams of documents Tillerson has now provided to the committee. Tillerson didn’t hand over tax returns but did submit a lengthy financial disclosure. On Tuesday, ExxonMobil released its plan for paying out Tillerson’s holdings in the company, which will net him about $180 million to be placed in a blind trust.
Tillerson has also given the committee information on various legal disputes ExxonMobil was engaged in during his time as chief executive, as well as transcripts of speeches he has made to think tanks and industry groups over the years. In those speeches, Tillerson often expressed what Senate aides described as a realist but generally mainstream view of international relations.
For example, in one speech that was handed over to the committee, Tillerson expressed the view that the United States needs to engage with Russia because of its role as a global energy supplier. He also said he believes that the three biggest risks for Europe are terrorism, refugees and economic stagnation.
Trump transition officials declined to speak on the record but did not dispute any of the readouts of Tillerson’s meetings with senators. Transition sources said that Tillerson has been studying a range of issues in advance of his hearing and meeting experts connected to the campaign. He doesn’t have any background, for example, on the Israeli-Palestinian conflict and is learning the history and nuances from scratch.
Several senators and aides described Tillerson as humble, cordial and respectful of the fact that he has a steep learning curve ahead of him due to his lack of government experience. Even skeptical Republicans see Tillerson as not the main problem when dealing with the Trump administration on Russia.
“He’s certainly a smart, very competent individual, has run a company very successfully. That’s the impression I came away with,” said Sen. James E. Risch (R-Idaho), a member of the intelligence committee and a Russia hawk who met with Tillerson this week.
Democrats may mount a fight against Tillerson, but it won’t succeed, Risch predicted.
Of the three Senate Republicans who have publicly expressed serious concerns about Tillerson, only one is on the committee: Sen. Marco Rubio (R-Fla.). Rubio hasn’t committed to a vote one way or the other, but the conventional wisdom on Capitol Hill is that he won’t want to be the Republican responsible for a failure by the committee to approve the nomination.
Even if the committee fails to approve Tillerson, Corker can still send the nomination to the Senate floor, where some Democrats, including Sen. Joe Manchin III (D-W.Va.), are sure to break ranks. Therefore, the best skeptical senators can realistically hope for is to get Tillerson on the record regarding as many Russia-related issues as possible.
“He’s going to have to say some tough things and make a couple commitments,” one senior GOP Senate aide who was not authorized to speak about the private meeting said. “And then even the people who don’t want to vote for him will say they got a couple concessions and they will hold their nose and move him through.”
The big question will be what happens after Trump and Tillerson take office. Congress is not going to abandon its drive to investigate and punish Russia for its mischief during the election. If Tillerson’s private statements are authentic, he may be inclined to support them, potentially putting him at odds with the new president.