Home / The Fattest of the Fat: ExxonMobil’s Raymond

The Fattest of the Fat: ExxonMobil’s Raymond

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Whilst world petrol prices rise, it is no secret that oil companies are making bumper profits at the expense of their customers. For all the talk of belt-tightening and concern about market stability, high oil prices bring delight to the energy barons because they can pump up end user prices whilst claiming that they are only responding to changes on world markets. Now, as if to show off to the world just how awash it is in cash, ExxonMobil, the fattest of the fat, has awarded its former CEO a retirement package worth four-hundred million dollars. This makes the paltry fifteen million Katie Couric is getting to read the news at CBS seem almost normal. This package adds a whole new meaning to “put a tiger in your tank”.

I understand that ExxonMobil, made up of the two primary descendants of the reviled Standard Oil Trust, wishes to reward its former Chief Fat Cat™ for a job well done, even though he had little (or did he?) influence over the price of crude oil, but how is such a figure even remotely justifiable? Are they rewarding him for thoroughly screwing everyday men, women and children who are ever more reliant on fossil fuels for the basics of daily life? Or is this some sort of an obscene game of oneupsmanship between them and the other oil majors whose profits were not quite as stellar?

Exxon’s generosity towards Mr Raymond is not limited to his platinum parachute. His 2005 compensation package was worth just over fifty-one million dollars and in 2004, he received a bonus of three-point-six million dollars. Despite this, Chief Fat Cat™ Raymond testified before Congress that “We’re all in this together, everywhere in the world” when the sharpest woman in the Senate, California Democrat Barbara Boxer, grilled him about why petrol prices were so high.

I don’t know about you, but if we’re all in this together, I think I should be allowed the use of the Exxon jet that is being made available to Mr Raymond as part of his retirement package and I think the company should send along a car and driver to shuttle me about too. I read last year in Daniel Yergin’s book on the oil industry “The Prize” about how one former Exxon CEO refused a filling station owner’s offer to let him jump the queue during the 1973 oil crisis. While this refusal may have been somewhat cynical when even then the company was cashing in on high oil prices, at the very least there was a shred of humility in the man, unlike the shocking hubris of Chief Fat Cat™ Raymond and company.

ExxonMobil defends the package, pointing out its spectacular stock performance during Raymond’s watch as well as the record thirty-six-point-one billion dollar profit they recorded for 2005. To put things into perspective, Exxon’s profit in 2005 amounted to six dollars for every single human being on the planet. Put another way, this astronomical profit was enough to buy almost 45 gallons of petrol (at $2.75/gallon) for every man, woman and child in the Evil Empire. This is equal to nearly ten percent of overall consumption for 2004. Of course, company officials point out that the staggering number is merely the result of staggering revenues but only adds up to a profit margin of nine-point-eight percent. The poor folks over at ExxonMobil whinge that their profit margins are far behind those in industries like banking and pharmaceuticals. They fail to point out however, that oil industry profit margins average eight-point-two percent, well outpacing the six-point-eight percent average for overall industry.

After reading such mind-boggling numbers as this, I continue to wonder why corporations are paying so little in taxes. In 2003, corporate taxation acounted for a mere seven-point-four percent of Evil Empire revenues, whilst this figure was thirty-two percent in 1952. Why is this? Why are companies allowed massive windfalls when they set up foreign subsidiaries? Why are they given a dizzying array of tax breaks and straight out handouts from the federal government. And why on earth did the Congress approve billions of dollars in tax breaks and subsidies for oil companies in the 2005 energy bill?

The obvious answer is that two oil men currently occupy the White House. They and all of their cronies are laughing all the way to the bank because the electorate is too blind to see that they are being robbed and too lazy to do anything about it even if they did.

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  • sal m

    the world runs on oil. why is it a surprise that oil companies make profits? if a guy has been in charge of a major oil company, and that oil company has been financially successful i don’t see why it’s a problem that they are compensated for their efforts.

    it seems that your position is that oil companies are inherently evil, and that they are not entitled to make a profit. while this position might resonate with some, it just doesn’t make sense.

    and what is the appropriate amount of profit for an oil company to make? and who would determine this mythical number?

    if exxon was half as profitable and/or this retirement package was worth $100 million would you be happier? if not, please provide your analysis for what kind of bonus or retirement package is suitable for a man who runs one of the most important companies in our economy.

    a poorly run, unprofitable oil company wouldn’t be in anyone’s best interest.

  • Alex

    The numbers you’re throwing around are misleading.

    First of all Raymond was not “awarded” a retirement package of $400 million. If you look at the 2005 ExxonMobil proxy statement you’ll find that of the $400 million being talked about, only $100 million is in the form of retirement benefits. $96 million of that is a lump sum payout of the defined benefits pension plan that he had accumulated over 46 years at Exxon. This is the exact same defined benefits pension that all ExxonMobil employees are part of. There was absolutely no discretion in Raymond getting this money.

    The other $300 million actually has nothing to do with his retirement. $51 million of that is is the income he had in 2005. So notice that when you say he got $400 million and that he was also paid $51 million in 2005 that is counting the $51 million twice.

    Also, 70% of that money in 2005 was not compensation for 2005. His salary and bonus for 2005 was about $10 million. The rest of the $51 million was from dividends and sale of stock grants from previous years. The majority of the remaining money in the “$400 million retirement package” is from shares of ExxonMobil stock that he was granted over his 46 years at Exxon but has not sold or is not yet able to sell. By the time he does sell the actual value could be very different from current book value.

    Of this “$400 million retirement package” only 25% is actually retirement benefits and essentially none of it was a discretionary award. The vast majority is compensation given out in previous years that is worth a lot because of the current high stock prices.

    I’m not saying that Raymond wasn’t overcompensated, he was. But labelling this $400 million as a retirement package is completely wrong. He’d have most of that money whether he had retired or not.

  • Nancy

    There is NO excuse or rationale on the face of this earth for paying ANYBODY this obscene amount of money. NO ONE is worth or has put in enough effort to earn such a sum, no one, for any reason. There is no justification, and never will be. Exxon stockholders should rise up in outrage over this mishandling of funds, at the very least. Talk about feeding at the trough-!

  • So Alex, what you’re saying is that not only is his retirement package ridiculous, his regular pay is too.
    And what you say is misleading.

    Everyone at EXXON doesn’t get the same golden parachute that Raymond is getting. If that were the case even $36 billion in profits wouldn’t help this comapney or the price of gas.

  • Alex

    No, everybody doesn’t get the same cash amount out of the defined pension plan but everybody is part of the same definition. It is not possible for Raymond to have NOT received that $98 million. It was predefined.

    And like it or not, but when you have an employee making $8-10 million per year, getting $100 million from your pension isn’t unreasonable (the $8-10 million is but not the other half).

    His retirement package is reasonable based on his unreasonable salary, and it was predefined. It isn’t like the Board of Directors got together and said, “we’ll miss you Larry, here’s an extra $400 million to see you on your way.” And the misleadingness of “a $400 million retirement package” is mostly in the fact that the vast majority of that money has nothing to do with his retirement. If he still worked for Exxon he’d have $300 million of that anyway.

    The argument isn’t that they are giving him too much for retiring. The argument would be that they gave him too much in stock options over the last two decades, which has nothing at all to do with his retirement.

    And the amount of profits has little to do with it either. The pension payment does not come out of profits and the value of the stock grants also does not come out of profits.

  • Dave Nalle

    The real point which ought to be stressed here is that Exxon is one of only TWO major oil companies, the other being Conoco, which actually increased their percentage of profit in response to the rise in gas prices rather than being satisfied with an increase in net because of the increase in price. The rest of the oil companies did not do this, and even Conoco cut back their profits to compensate. Only Exxon engaged in true, unapologetic profiteering.

    The issue of Raymond’s compensation is ridiculous, as Alex pointed out. It’s also more or less irrelevant from the point of view of the consumer. It’s not his compensation which hurt the consumer, but the business practices of his rapacious company.


  • Nancy

    All of which were endorsed by, if not engineered by, their equally rapacious & greedy CEO.

  • Maurice

    The oil companies only get about 9 to 11 cents per gallon of gas. The Feds charge 18 cents.

    Who is the real bad guy? Can Barbara Boxer fix this?

  • Maurice – I can’t understand why you’re defending these guys…maybe you can explain the $1,000,000 a year consulting job Raymond is getting as part of his retirement deal. And if EXXON only makes 10 cents on the gallon then they must have sold 36,000,000,000,000 gallons of gas last year.

    If they only make 10 cents on the gallon how the FUCK did EXXPON NET $36 billion last year??????

    I’m over here frantically waving the bullshit flag!!!

  • Bliffle

    “The issue of Raymond’s compensation is ridiculous, as Alex pointed out. It’s also more or less irrelevant from the point of view of the consumer. ”

    If you had the opportunity to view activities of the Boards Of Directors of major companies you might be surprised to discover that more than half of their agenda is consumed with compensation demands from top execs. This is new in the past 20-30 years and disturbing to trad BoD members who are concerned with the health of their companies. It persists because of the mostly successful takeover of the BoDs by operating officers who are indebted to other operating officers. These issues are usually excluded from BoD reports as ‘sensitive personnel issues’ not subject to shareholder review.

    What it amounts to is looting company treasuries by operating officers at the expense of the futures of those companies, their customers, and often the general public.

    Of course it’s daft for taxpayers to support this activity with huge tax breaks and direct subsidies, but that is exactly what this (oilmans) administration is doing. It’s also daft to invest in a company so inclined without fully understanding how it will affect ones own investment. But basically the small investor is flying blind.

  • Nancy

    The only solution would be to force congress to change the current BoD laws to open all compensation issues to all stockholders – which will happen about the same time as congress agrees to actually pass rules with teeth concerning their own pecadillos.

  • Maurice


    calm down and put away that flag. I am not defending gas execs. I am just saying that if we are going to say the gas execs are bad then the feds are bad times 2. Here in my hillbilly state of Idaho they charge 28 cents per gallon for a state gas tax! That is bad times 3!

  • Bliff, the current administration has absolutely no say over and nothing to do with the excessive compensation problem. It predates the current administration and how under our laws could they even legally step in and do something about it? Trying to blame everything from the weather to greed on Bush is insane. If that is that where partisanship takes you then you might want to see a therapist.

    As for Exxon’s 10 cents on a gallon sold, that’s a bit low. I think it’s closer to double that since the price of oil went up. Oil company profits are based on a percentage of price, so when price goes up profits automatically go up without the oil company doing anything unreasonable to extract additional profit. Exxon, of course, increased their percentage at the same time the price went up, which is why they’re such reprehensible scumbags and the other companies are not.

    To figure out where Exxon made all of its money you merely have to check out their quarterly reports. Here is a link to the final report for 2005. Compare that with the same report for 2004, and you will see where the profits began to increase dramatically, in late 2003 and early 2004, really prior to the major rise in gas prices. Exxon lays the increased profits on their increase in refining capacity of 64,000 barrels a day. But take the figures and have fun with them.


  • Nancy

    I don’t have too much problem with corporations making money as long as they pass along most of them honestly to their investors, & they aren’t doing anything else criminal while they’re at it – which automatically lets Exxon out. The adminstration’s culpability lies in its willingness to look the other way, and where possible to weaken or complete do away with laws to protect the public, instead of enforcing the laws already on the books against these assholes. THAT is why BushCo is ‘guilty’.

  • bob

    don’t ever send me this thing again ok you are a something so okkkkkkkk yes forreal dont send me that again

  • The oil companies don’t make 10 cents a gallon, that would be 360 billion gallons for Exxon when the *whole world* only makes 600b gallons of gasoline per year. (29b barrels * 42gal/barrel * 0.5 refining efficiency=600b). Exxon isn’t half the world’s supply.

    Exxon makes money by shutting down refineries, at least two dozen in the late 90’s plus however many more since. And the war in Iraq has shut down all excess crude production driving the market to $75/barrel. Hell, OPEC only asks $25/barrel and Venezuela is happy to sell for $15.

    This is all a false economy, forced scarcity stemming from an oversupply of cheap crude. Oil is cheap to pump out of the ground and Exxon does whatever they can to make it impossible to refine into gasoline. They’ve been doing it for 10 years and people are finally catching on. Oil should be cheaper than ever, we are hitting peak world production and the competition between OPEC and non-OPEC is fierce as hell.

  • Patrick O’Loughlin

    The author needs to stop reading works like “The Prize” which is fiction with an agenda, and start aquiring a meaningful understanding of the subject of Economics. He could start with Thomas Sowell’s “Basic Economics: A Citizen’s Guide to the Economy.”

  • MCH

    Did Limbaugh go off his diet? …uh…oops, never mind…I thought this was an article about Rush Limbaugh.