Exxon Mobil Should Pay Up and Soon

Last year, Exxon Mobil reportedly paid its Chief Executive Officer $147 million in compensation and benefits. That amount is $55 million more than what the State of Alaska and three federal agencies announced today that they are seeking from the company in new damages from the 1989 wreck of the Exxon Valdez oil tanker in Prince William Sound.

After posting a record $36.1 billion in profits last year-- that's right, billion with a "b"-- and with Congress making noise about windfall-profit legislation, there is no legitimate reason for the company not to quickly and happily pay the damages. It is, pardon the pun, a drop in the ocean compared with the money that routinely passes through the company's coffers. And the demand comes at a particular pregnant moment-- with company shareholders in meetings about the company's future.

The government was able to make the new request for damages under the terms of the original settlement with the company. In the law, such a provision is called a "re-opener," a clause contained in an initial agreement that provides for the possibility of later-developing damages. Alaska and the feds say that there is still an oil problem in the Sound, and it has emerged relatively recently and thus is within the spirit and letter of the re-opener. Exxon already has paid about $900 million in restitution for the spill.

Exxon Mobil can delay the process, perhaps even for years, but at the risk of antagonizing the very folks in Congress and in the executive branch who already are jittery about their ties to Big Oil during an age of $3/gallon gas prices. And clearly smart corporate lawyers can gin up arguments that the damages sought by the federal and state governments are not justified by science-- all you need to do that is a couple of cheesy expert witnesses in the pocket of the oil giant to create a disputed issue of material fact. But that doesn't mean the company ultimately would prevail or even avoid having to pay further damages. The smart move here for the company would be to pay the money and run.

By  |  June 1, 2006; 4:30 PM ET
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Comments

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Is ExxonMobil a charity? Why should they pay no questions asked? They've already paid nearly $1 billion dollars for their mess. Isn't there a point at which they've paid enough?

Don't blame ExxonMobil for being profitable. The reason they're profitable is because americans like gasoline and other oil products. We drive big cars long distances, and refuse to be inconvenienced by using buses, trains, bicycles, or even walking. ExxonMobil is merely serving a demand, a large demand.

Posted by: ah | June 1, 2006 09:03 PM

vvv

Posted by: | June 1, 2006 09:56 PM

It would cost XOM more in legal fees to contest the additional damages. Sometimes a prudent business decision is warranted.
Paying the ex CEO that amount is beyond comprehension. The new Treasury Secty has a net worth of 700 million. Let him contribute some money to Alaska, after all he is an environmentalist.

Posted by: | June 1, 2006 10:05 PM

The U.S. may not be a monarchy, but we have a royal class: corporate CEOs. With salaries that would make a NBA player blush, no accountability (to hear Ken Lay tell it), and perks fit for a king, they flaunt capitalism and excess to a degree that it's poisoning the nation.

What does it say of our value system that Exxon's CEO is worth nearly as much in a year as the damages his company created for many lifetimes?

Speaking of values, new on EWM:
Contrition, Crawford Style
http://www.eyewitnessmuse.com/diary.php?p=225
...Standing in front of the nation and beside what's left of Tony Bair, Bush admitted that he's just too damn manly. Bush says it was the "tough talk," that stands out among mistakes. You know, the "bring it on," "wanted dead or alive" crap.
The President let his inner cowboy out and he's sorry for sending the "wrong signals." Signals are important to this caballero. There's no "Brokeback" in his Baghdad policy...

Posted by: The Eyewitness Muse | June 1, 2006 11:05 PM

Might want to check your math there. The article you've linked, and the Post's own article, say that the government has requested $92 million. Lee Raymond's $147 million compensation package would be $55 million MORE than the amount request (and emphasizing a payday higher than the amount requested by the government makes more sense than emphasizing that the government wants more than Exxon paid its CEO...especially since that's not what Uncle Sam wants).

Posted by: Derek | June 1, 2006 11:24 PM

p.s. There's not a chance in heck that Exxon's legal fees for contesting this will approach $92 million.

Posted by: Derek | June 1, 2006 11:26 PM

ExxonMobil is being asked to pay $92M for damage they caused, and they're quibbling about it after reporting record profits of $7 BILLION in the 1st qtr 2006 alone. That's 1.3%. Gimme a break. I guess it's time to drive by the Exxon station and go to the next gas station on the block.

Posted by: Eric | June 1, 2006 11:29 PM

Oh yeah, I almost forgot. How much did they pay their former CEO in salary and retirement? Enough to pay for the cleanup and then some.

Posted by: Eric | June 1, 2006 11:30 PM

I would like to see an article sometime that discusses these outrageous salaries. I also believe that a profit is one thing, but taking advantage of people is another.

Yes, Exxon should be responsible for every bit of damage in Alaska. They were responsible.

Posted by: rw | June 1, 2006 11:32 PM

I believe Exxon should pay up right now and the money be used to do clean up in Alaska and help the people who have lost income due to damage to the environment.

Ring Huggins in far west Texas

Posted by: Ring Huggins | June 1, 2006 11:35 PM

Thanks for noticing my mistake, Derek. It has been fixed. And thanks to the rest of you, too, for taking the time to read the post and for writing.

Posted by: Andrew Cohen | June 2, 2006 07:26 AM

Exxon was cheap with their monitoring of emergency procedures and equipment before the spill. There is a leak a day in Prudhoe Bay. Criminal neglect. Exxon and all oil companies should be banned from Alaska until all ships are double hulled, all pipelines are corrosion free, and all safety procedures are in tact. The oil in the refuge would last America less than one year and would not be ready for ten years. Who needs it? By then, hopefully, we will have all switched to ethanol like Brazil.

Posted by: Maryanne | June 4, 2006 04:51 PM

Why is Exxon permitted to continue oil production in Alaska. The State of Alaska need to get tough. Exxon has made a laughing stock of the judicial system. They are setting a presidence for future law suites to follow. They have zero respect for the judges and peaple of Alaska. Both of my parents have already died while waiting for Exxon to be made to pay thier debt. If it were you or I we would not be getting away with this. The court system would have liens on our homes and any other asset that we have. How long is this going to be allowed to continue. Would someone please please get a backbone and do what is right.

Posted by: Waiting Patiently in Alaska | August 19, 2006 12:20 AM

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