Rex Tillerson’s nomination to be secretary of state in December raised an immediate and clear conflict of interest: As the CEO of ExxonMobil, he had $181 million worth of company stock that will vest in the next ten years. As secretary of state, Tillerson would have innumerable chances to make decisions that would boost the fortunes of ExxonMobil, the largest multinational oil and gas company in the world.
ExxonMobil and Tillerson announced their attempt to solve that problem last week, and at first glance it’s not bad—it certainly goes miles further than anything Donald Trump appears willing to do in order to resolve his own conflicts of interest. But a closer look at both the letter and the spirit of the Tillerson-ExxonMobil arrangement shows Tillerson has not fully separated his financial interests from that of the company.
Under the deal, Tillerson would cash out all of his non-vested stock if he’s confirmed as Secretary of State and place the proceeds in an irrevocable trust that he cannot control. He would get payouts from this trust over a 10-year period. Also, if Tillerson goes back to work in the oil and gas industry in the next ten years, he immediately forfeits whatever is left in the trust, which would be dispersed to a charity that Tillerson couldn’t even choose.
This arrangement would ostensibly solve two problems: Nothing Tillerson does as secretary of state would boost his present financial holdings, and the forfeiture clause eliminates the incentive for Tillerson to return to his industry after becoming secretary of state. In other words, it would theoretically take away the possibility that Tillerson would do things to make oil and gas companies a bunch of money, and then return to the industry afterwards to receive his reward.
But ExxonMobil appears to be pulling a fast one. In documents filed with the US Securities and Exchange Commission describing its arrangement with Tillerson, the company stated that if Tillerson “becomes employed by or provides services to a company in the oil and/or gas or oil and/or gas services industries, Mr. Tillerson will forfeit the remaining undistributed assets in the Trust.”
But the documents between Tillerson and his trustee, also filed with the SEC, say something else entirely, as the eagle-eyed David Arkush of Public Citizen noted. The agreement with the trustee says only that Tillerson’s assets will be forfeited if Tillerson violates the clause that “the Beneficiary shall not engage in competitive employment in the oil and/or gas industry.” The key word there is “competitive.” It means Tillerson can’t go work for BP or some other company—but could go back to work for ExxonMobil. (The company has a mandatory retirement policy at 65, which would preclude Tillerson’s return as an employee, though he could easily come back as a consultant.)