Replies to post #520 on The Rising Influence of Rising Affluence

[DewDiligence]

(XTO) Nice work if you can get it…

http://online.wsj.com/article/SB10001424052748704869304574596210584664756.html

›XTO Chairman to Get $23 Million Bonus

By BEN CASSELMAN
DECEMBER 14, 2009, 5:20 P.M. ET

Under change-in-control provisions in his contract, XTO Chairman Bob R. Simpson will get a $23 million bonus, not $120 million as previously reported by the Journal. [Only $23M? Surely, such a paltry sum would not influence a decision to sell the company (LOL).]

Based on the terms of XTO's acquisition by Exxon Mobil Corp., Mr. Simpson would also receive $10.8 million in salary, plus various other payments.

In April the company's proxy statement said that in the event of a change in control he would receive $170.8 million in compensation, $120 million of which would be bonus, though the amount he was due would decline over time.

In November, however, the company disclosed that it had signed a new agreement providing that, in the event of a change in control, Mr. Simpson's bonus would be paid in cash based on the value of shares awarded as a bonus this year, which work out to about $23 million.

XTO didn't responded to requests for comment.‹

[DewDiligence]

Why the XOM-XTO Deal Was All-Stock (addendum)

[I reposted the following from the ‘Big Dog's Boom Boom Room’ board on SI ( http://siliconinvestor.advfn.com/readmsg.aspx?msgid=26180785 ) in reply to a poster named ‘jrhana’. Feedback welcome!]

>One more reason for all-stock deal would be tax implications for XTO shareholders<

Understood; however, I do not buy the notion that the above was the main impetus for the XOM-XTO deal to be for stock rather than cash.

Imagine the PR hit XOM would take in Congress and in the lay press if they publicly disclosed that they wanted the XTO deal to be all-stock in order to avert having to pay US income taxes on the accumulated profits of XOM’s foreign subsidiaries!

Even worse would be the that such a disclosure might have on the desire of Obama and many Democrats in Congress to eliminate this tax “loophole”* and make US-based companies pay US income tax on their worldwide profits regardless of the country of origin. XOM is sufficiently prominent and sufficiently hated by liberals in Congress that such a disclosure could well precipitate the passage of a business-unfriendly tax bill in 2010 or 2011.

In summary, I’ve seen the “official” rationale for the XOM-XTO deal being all-stock and I don’t believe it; instead, I stand by the post in #msg-44517114.

*Never mind that the US is the only major country in the world to tax a company’s foreign profits!