Secretary of State Nominee Rex Tillerson will put two million shares of ExxonMobil into a blind trust
Former CEO of ExxonMobil (ticker: XOM) Rex Tillerson has reached an agreement with the company to eliminate any conflicts of interests he has in order to serve as secretary of state in the Donald Trump administration, Exxon said in a press release Tuesday.
Under the agreement, which the company said was developed in consultation with federal ethics regulators, if Tillerson is confirmed as secretary of state, the value of more than two million deferred XOM shares that he would have received over the next 10 years would be transferred to an independently managed trust, and the $4.1 million in cash bonuses over the next three years that Tillerson would have received will be cancelled. The former CEO would also forfeit retiree medical and dental benefits, and administrative, financial and tax support.
The trust would be prohibited from investing in ExxonMobil and the trustee would manage the assets consistent with government ethics rules, XOM said in its release. Payments to Tillerson from the trust would be subject to the same 10-year schedule that the cancelled awards would have had if they had continued in place.
Tillerson, who retired from Exxon after a 40-year career on Saturday, also agreed to sell the more than 600,000 XOM shares he currently owns. They’re worth more than $54 million at today’s price.
As with all political appointees who sell assets that may pose conflicts of interest, Tillerson would be allowed to defer any capital gains tax he owes from selling his Exxon shares as long as he reinvests the proceeds within 60 days into “permitted property,” which is essentially U.S. Treasury securities and diversified mutual funds.
Tillerson’s situation is not necessarily unique, but it is complex
Rex Tillerson is not the first businessman turned diplomat to hope to serve the United States. When John Kerry became secretary of state nearly four years ago, he and his wife, Teresa Heinz, divested from a long list of companies to avoid any possibility of a conflict of interest, reports NPR.
For the same reason, George Shultz — an executive at Bechtel before serving as Ronald Reagan’s top diplomat — set up a blind trust, says Davis Robinson, the State Department’s legal adviser at the time.
But, Robinson says, “his was not as complicated as Mr. Tillerson, because Mr. Tillerson owns so much of Exxon Mobil stock.”
Tillerson faces a Senate hearing before he can be officially appointed to the position of secretary of state, and many on Capitol Hill are concerned about more than just business ties. The former CEO opposed sanctions against Russia following the annexation of Crimea, and has long business ties with the Russian government.
“It is my hope that he’s enough of a patriot to separate his decades-long affiliation with this major oil company and the genuine interest of the American people,” said Sen. Chris Coons, a Delaware Democrat who serves on the Senate Foreign Relations Committee.
