February 24, 2021: In response to Exxon Mobil Corporation’s ITEP Application #20200425-ITE

On February 24, 2021, the East Baton Rouge Metro Council considered and subsequently approved an application for the Industrial Tax Exemption Program from Exxon Mobil Corporation for a project in East Baton Rouge Parish. The Advocate reported the tax abatement was worth an estimated $23 million over ten years. Exxon executives claimed it was necessary that East Baton Rouge Parish forego the approximately $23 million in property taxes over 10 years in order to “help it modernize its oil refinery in Baton Rouge.”[1] Here’s some additional information to demonstrate this ITEP application was not only unjustified. It was absurd.

According to Exxon’s ITEP application, its refinery in East Baton Rouge Parish is the fifth largest refinery in the United States.[2] It’s not the fifth largest Exxon facility. It’s the fifth largest of all refineries in the U.S.

According to Exxon’s 2019 10-K, their refinery in East Baton Rouge Parish is their third largest refinery in the world. (The first largest is in Singapore. The second largest is in Baytown, TX.)[3]

The notion that Exxon could perform an upgrade to an existing facility other than the one in East Baton Rouge Parish and reap a commensurate benefit seems unlikely.

This project creates no new permanent jobs.

Therefore, this ITEP application doesn’t really satisfy the requirements for approval.

And yet, Exxon asked East Baton Rouge Parish to forego more than $23 million in property taxes over 10 years.

Please note that this amount is less than what they paid their CEO in 2019.[4] Let me reiterate: what Exxon is refusing to pay East Baton Rouge Parish over 10 years, they paid to their CEO in one year.

Another consideration:

According to information provided by Exxon, Exxon paid $137.1 million in property taxes to East Baton Rouge Parish, but that was over 3 years (2017, 2018, & 2019).

That means on average Exxon paid only $45.7 million in property taxes per year to East Baton Rouge Parish.

That may sound like a lot of money, but for comparison, it’s worth looking at Exxon’s executive compensation. The following information is pulled from Exxon’s 2020[5] and 2018 Proxy Statements[6].

In 2019, Exxon paid their top five executives $69,341,302.

In 2018, Exxon paid their top five executives $57,600,999.

In 2017, Exxon paid their top five executives $59,107,918.

In each year, Exxon paid on average more to five of their executives than they paid in property tax to the people of East Baton Rouge Parish.

Another important piece of information: Pay Ratio[7]

In 2019 the total compensation package for Exxon’s CEO was $23.5 million dollars.

In 2019 the median salary of all Exxon employees was $173,712.

That means the ratio of the CEO’s compensation to that of the median employee compensation is 135:1. Again: the CEO’s compensation is 135 times more than the median employee’s compensation.

Exxon has expressed the intent to maintain 1,325 existing jobs. (They’re not creating new permanent jobs.) The average salary of those jobs according to Exxon’s ITEP application is $105,000.

If we compare Exxon’s CEO’s direct compensation to that average salary, it’s 153 to 1.[8]

If we compare the CEO’s total compensation, it’s 224 to 1.[9]

Finally another important comparison Metro Councilmembers in particular might appreciate: The compensation of Exxon’s “non-employee” Board members.

Like our city-parish government, Exxon has a Board.[10]

On this Board, there are nine “non-employee directors.” These positions are considered part-time, as is a board position for our Metro Councilmembers.

Exxon’s Board met 10 times in 2019.[11] I believe our Metro Council meets approximately 24 times per year.

Exxon’s 2019 base pay for their non-employee Board positions was $281,696.[12]

The base pay for members of the East Baton Rouge Metro Council is $12,000,[13] though the Personal Financial Disclosure statements submitted by Councilmembers indicate that many are paid as much as $21,600.[14]

Twenty-one thousand six hundred dollars is still a far cry from $281,696. In fact, $281,696—the base pay in 2109 for one non-employee Exxon Board member—is more than we pay our entire twelve-member Metro Council in one year.

A few of Exxon’s non-employee Board members receive additional compensation for committee work. So the total annual compensation for Exxon’s part-time board members in 2019 was $2,565,264.

This means Exxon is willing to pay its part-time Board members more per year than they are willing to forego in property taxes to the people in East Baton Rouge Parish.

According to its own profile, Exxon has been in this parish—the refinery has been at its existing site—since 1909.[15] The company has made hundreds of billions in profit over the course of its history, including 14 billion in 2019 and approximately 20 billion in 2018 and 21 billion in 2017.[16] And yet, East Baton Rouge Parish has one of the highest poverty rates in the nation. Some business leaders and Exxon executives push the false narrative that the poverty would be much worse if it were not for Exxon’s largesse. However, for nearly 20 years, Exxon has been the top recipient of ITEP awards in East Baton Rouge Parish and the greater beneficiary. From 1998-2017, ExxonMobil Corporation was awarded a total of 203 tax abatements. The cost to East Baton Rouge Parish over the 20 year period: $589,413,745. That’s $29,470,687 per year. Did these tax exemptions create jobs? On the contrary, over the same time period jobs at all Exxon facilities declined from 4,756 to 2,037.[17] That’s a 57% decrease. If Exxon would have simply paid its taxes—a modest share of the profits generated in East Baton Rouge Parish—their “generosity” would be unnecessary. The property taxes rightfully belong to East Baton Rouge Parish, and the persistent high poverty rate clearly indicates East Baton Rouge Parish needs them. Instead, Exxon refuses to pay, diverting those tax dollars back into its own coffers and to their business associates. And they will continue to do so as long as our elected officials and we, the voters, allow them to. ________

[1] Lussier, Charles. “ExxonMobil tax break request moves ahead,” The Advocate, 19 Feb 2021, (1B). [2] Company Information. Industrial Tax Exemption Program Application, Project ID: 20200425-ITE. [3] ExxonMobil Corporation. (2019). Form 10-K. Retrieved from https://ir.exxonmobil.com/node/30396/html. “Refining Capacity At Year-End 2019,” p. 24. [4] ExxonMobil Corporation. (2020). Proxy Statement. Retrieved from https://ir.exxonmobil.com/node/30531/html. “Executive Compensation Tables,” p. 50. [5] Ibid. [6] ExxonMobil Corporation. (2018). Proxy Statement. Retrieved from https://ir.exxonmobil.com/node/15326/html. “Executive Compensation Tables,” p. 45. Executive Compensation201920182017D.W. Woods23,494,92918,777,78717,466,133A.P. Swiger12,332,84012,068,87811,215,974N.A. Chapman13,304,9009,603,006MW Albers11,231,111JP Williams12,044,2859,362,786MJ Dolan11,314,951N.W. Duffin8,164,3487,788,5427,879,749TOTAL69,341,30257,600,99959,107,918 [7] ExxonMobil Corporation. (2020). Proxy Statement. Retrieved from https://ir.exxonmobil.com/node/30531/html. “Pay Ration,” p. 69. [8] Direct compensation includes salary and stock options but disregards pension. [9] Total compensation includes salary, stock options, and pension. [10] ExxonMobil Corporation. (2020). Proxy Statement. Retrieved from https://ir.exxonmobil.com/node/30531/html. “Board of Directors,” pp. 7-26. [11] Ibid. “Board Committees,” p. 15. [12] Ibid. “Non-employee Director Compensation for 2019,” p. 26. [13] FAQs. https://www.brla.gov/Faq.aspx?QID=330 [14] Financial Disclosure Reports for elected officials are available at https://ethics.la.gov/PFDisclosure/DisclosureSearch.aspx [15] “About Us.” https://corporate.exxonmobil.com/Locations/United-States/Baton-Rouge-area-operations-overview [16] ExxonMobil Corporation. (2019). Form 10-K. Retrieved from https://ir.exxonmobil.com/node/30396/html. [17] "Giving Away the Farm: a cost-benefit analysis of the industrial tax exemption program" (August 2017). https://www.togetherla.org/fairtaxes

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