Exxon Mobil CEO Darren Woods received a nearly 3% raise in total compensation for 2023, reaching $36.9 million, according to a regulatory filing submitted by the oil giant. This news comes as Exxon grapples with declining profits, highlighting a growing disconnect between executive pay and company performance. The situation has sparked outrage among some shareholders and raises questions about Exxon’s commitment to responsible corporate governance.
Shareholder Pushback on Pay and Environmental Issues
Exxon is recommending shareholders reject proposals from activist investors at its upcoming annual meeting on May 29th, 2024. These proposals address critical issues that extend beyond executive compensation. One proposal calls for linking executive pay to greenhouse gas emission reduction efforts. This aligns with the growing pressure on oil companies to transition towards cleaner energy sources and mitigate their environmental impact.
Another proposal seeks a report on Exxon’s diversity and inclusion practices. This reflects ongoing concerns about the lack of gender and racial equality within the company’s leadership. Finally, a proposal for an additional report on plastic pollution highlights the environmental damage caused by Exxon’s products and the need for more sustainable practices.
Exxon has a history of successfully blocking similar proposals, arguing they are burdensome and costly. However, these proposals represent a growing investor sentiment that demands greater transparency and accountability from the company.
A Widening Gap: CEO Pay vs. Worker Wages
The significant pay raise for CEO Woods becomes even more contentious when compared to the wages of Exxon’s workforce. Woods’ compensation is nearly 200 times higher than the median salary of an Exxon worker, which rose 8% to $185,376 in 2023. This vast pay gap raises concerns about income inequality within the company and the disconnect between executive rewards and overall company performance.
Similar disparities exist elsewhere in the oil and gas industry. Chevron CEO Michael Wirth also saw a compensation increase of 12.2% in 2023. These hefty pay packages, awarded despite declining profits, fuel public debate about fair compensation practices and the need for a more balanced distribution of corporate wealth.
Adding to the controversy surrounding the pay raise are details about Woods’ relocation expenses. Part of his compensation included over $780,000 to cover the cost of moving his residence after Exxon relocated its office within Texas. This perk seems excessive, especially considering the company’s declining profits.
Exxon ended 2023 with a profit of $36 billion, a significant drop compared to the record-breaking $55.7 billion earned in 2022. The decline reflects a decrease in oil and gas prices following the initial surge caused by the Russia-Ukraine conflict. This raises questions about the timing and justification for such a substantial pay increase for the CEO.
The Future of Oil and Executive Compensation
Exxon’s decision to raise executive pay despite declining profits is likely to continue fueling debate about corporate governance and income inequality. As the energy sector navigates a changing landscape with a growing focus on clean energy, investors and stakeholders will be closely scrutinizing how companies like Exxon balance executive compensation with overall performance and environmental responsibility.
There are growing calls for a more sustainable approach to executive pay, linking it to factors such as long-term company performance, environmental targets, and social responsibility initiatives. This shift would incentivize executives to make decisions that benefit all stakeholders, not just themselves.
The controversy surrounding Exxon CEO pay highlights the need for greater transparency and accountability in corporate governance. Shareholders, employees, and the public deserve a clear understanding of how executive compensation is determined and how it aligns with company performance and societal well-being.
Source: Reuters
