by Viraj Shah
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As the day for the confirmation of Secretary of State is closing in, Rex Tillerson needs to buckle up and get ready for a tough day. He must answer an array of vexed and even uncomfortable questions. The leader of the global oil giant Exxon-Mobil since 2006, Tillerson is now all set to become an aide for President-Elect Donald Trump. He is an impressive addition to Trump’s list of business executives in the cabinet. However, his foreign outlook, tax regime, capital gains and exit-package from the company will raise many eyebrows in the Senate Foreign Relations Committee.
The Gains, The Taxes and the Questions
A seasoned and successful business executive, Tillerson has spent four decades with Exxon. He has two million unvested shares amounting to $174 million at current market price in the company. These unvested shares cannot be sold, deferring the tax payments in the process. A tax bill of $72 million could be pending on Tillerson if he is confirmed as the Secretary of State on Wednesday. His exit-package is, however, designed to save the immediate tax liability.
If Tillerson is confirmed, the shares of the Exxon-Mobil front man will be turned to cash and kept secure in an independent trust. The funds will be disbursed to Tillerson in trickles over the next 10 years. Northern Trust Corp., given the responsibility to handle the trust, will ensure these monetary trickles flow smoothly and he pays ordinary income tax.
Exxon-Mobil has strict policies related to vesting of shares. An acceleration of such vesting is a novel practice for the company which allows such a situation only in cases of death. Alan Johnson, New York based Executive-Compensation Consultant said that the company is making an exception for Tillerson.
The plan still faces ‘substantial risk of forfeiture’ if Tillerson works for a competitor in the next 10 years. Still, the trust will count his words as final as to his involvement with a competing firm. As of now, his confirmation hearing will certainly foresee a discussion on this issue per government ethics.
Foreign policy, as demanded
Tillerson has not revealed specifics of his foreign policy or strategy yet. Arizona Senator, John McCain, and South Carolina Senator Lindsey Graham have both wanted to hear his views on U.S.-Russia relationship. Many Senators are questioning Trump’s Russian leanings and questions will be raised for Tillerson on Wednesday.
Prominent questions will include Russia’s cyberwarfare against the United States and its possible interference in the Presidential elections. Graham has expressed interest in knowing Tillerson’s views on Russian cyber influence and it’s marked aggression in Ukraine, Middle East, and Syria. Questions about Russian annexation of neighboring countries and acknowledgment of Putin’s image as a corrupt political figure can trip the seasoned business executive.
6 Senators, including Graham and McCain, will introduce a bill for mandatory asset freezes and visa bans on any activities that hamper the cybersecurity of public and private infrastructure. The bill, amongst other things, condemns Russian aggression in Ukraine and Georgia and bans any investment in privatization of state-held assets in Russia.
Besides, he must face questions on Cuban human rights improvements and defending international waters at the South China Sea. The hearing will have Senators ready with their questions and Tillerson must come prepared.