By Steven Mufson
Washington Post Staff Writer
Thursday, June 1, 2006
DALLAS, May 31 -- The performance Wednesday of Exxon Mobil Corp. chief executive Rex W. Tillerson at the company's annual meeting might have been downright warm and fuzzy compared with his predecessor's, but that didn't stop shareholders from adopting a resolution over the objections of the company's board of directors.
Exxon officials said they believed it was the first time in the company's history that a resolution had been adopted over the objections of the company, and it was seen as a sign of anger over the board's decision to award outgoing chief executive Lee Raymond a final-year pay package of $69.4 million and a retirement lump sum of $98.4 million.
"I think there's some unhappiness about the way [Raymond's] compensation was handled, and I think that's what we were seeing" with the shareholders who voted for the resolution, Tillerson said at a news conference after the meeting.
The nonbinding resolution, which passed with 52.2 percent of shares voting, said directors should be required to get a majority, not just a plurality, of votes to win a spot on the board. As usual, all of the company's directors this year ran unopposed.
In a further sign of shareholder discontent, four members of the board's compensation committee received 79.4 percent to 82 percent of the shares voted, after proxy advisory firm Institutional Shareholder Services urged stockholders to withhold their votes to protest the Raymond package. State treasurers in Connecticut and North Carolina said they would withhold their votes. Other directors received no less than 94 percent of shares voted.
But the shareholders' anger at Raymond and the board didn't seem to spill over to Tillerson, who was applauded after a shareholder praised his "candor and friendliness" and denounced "disrespectful, rude and uneducating" treatment shareholders had received in recent years.
Raymond had been known to reduce questioners to tears and brush off queries he didn't like, but Tillerson relaxed more as the meeting went on and joked about playing golf with a critic of the company's sponsorship of the Masters Tournament at the restrictive Augusta National Golf Club and not taking a wager offered by a clergyman because of Texas gambling laws.
To his sharpest critics, those unhappy about Exxon's meager investment in alternative energy sources, Tillerson said in a conciliatory manner: "I don't think we have as big a difference as it seems."
At the same time, he gave no ground to advocates of alternative energy, saying it would be of minor significance without technology advances. Several shareholders urged Tillerson to diversify investments for the good of the company, but he said that most alternative energy sources weren't worth Exxon's investment.
"I'm looking at the world 15 to 20 years out," he said. "That's where I'm living." He said that the mix of energy sources 20 years from now would resemble the mix today. "It's a question of whether these are going to make a meaningful difference or not," he said. "We're going to do what's in the best long-term interests of shareholders."
Exxon has drawn criticism from a several quarters, including Energy Secretary Samuel W. Bodman, the California Employees' Retirement System and Sierra Club, for doing what they say is too little to develop alternatives to petroleum.
Tillerson was most combative with critics of Exxon's funding of scientists and institutes that cast doubt on global warming. With reference to the global warming debate, he said that the phrase "scientific consensus" was an "oxymoron." And he denounced those who said the company was underwriting "junk science," arguing that Exxon was simply taking part in the "debate" over global warming.
After the meeting, Tracey C. Rembert, a representative of the Service Employees International Union, which owns $12.5 million worth of Exxon stock, said Exxon had funded groups that "have tried to muddle the debate" on global warming, not clarify it. She said it was unfortunate because "in so many other ways Exxon excels at long-range thinking."
The tone of the meeting was a little different from the tone of some industry presentations to the public. Instead of noting how narrow profits were as a percentage of revenues, Tillerson pointed to the 31 percent return on capital, the $54.2 billion cash flow in 2005, and the more than doubling of earnings per barrel from mid-2001 to mid-2005. The company earned $36 billion last year, a U.S. record.
While praising Exxon's performance compared with that of other big oil companies, Tillerson said "our results in 2005 were outstanding, clearly supported by strong commodity prices."
That drew few complaints from shareholders, whose dividends rose as they have every year since 1983.
But shareholders showed signs of anger about Raymond's retirement package. Walter Durham, a regional vice president of East-West Ministries International who said he had been a director of more than a dozen companies, said Raymond's package represented "colossal greed" and won loud applause when he called on the board to "never again grant such excessive compensation to an Exxon executive."
There was also substantial shareholder support for some of the other 15 resolutions on the floor Wednesday, though none passed. Three of them attracted about 34 percent of shares cast, including a proposal to require that different people hold the posts of chairman and chief executive, one on reforming the election of directors, and one that would amend the company's equal employment guidelines to make explicit a prohibition against discrimination based on sexual orientation.
The company's meeting at the Morton H. Meyerson Symphony Center attracted a small number of protesters who stood outside with signs that said "No Planet, No Dividends," "Exxpose Exxon," "Corporate Greed Keeps Us in Need" and "This Year's Heat Wave Sponsored by Exxon Mobil."
A group of 10 people wore blue cardboard barrels with slogans including "Bankrupting Our Future" and "Pumping Junk Science."
"I couldn't get everything I wanted to say on a sign," said Carol Ezell, who described herself as a devoted grandmother from Dallas. She held a sign that said "Exxon: A Greedy Polluter."