Big Oil wins again

[revwardoc]

http://wbztv.com/nationalwire/22.0.h...xxonValdez.xml

Oil spill ruling leaves Alaska victims stunned

ANCHORAGE, Alaska (AP) Mike Lytle, a third-generation fisherman from the coastal village of Cordova, said many residents there were walking around stunned, shaking their heads.

A lot of people he knows were planning their retirements with the $2.5 billion in punitive damages that Exxon Mobil Corp. was expected to pay the nearly 33,000 victims of the worst oil spill in U.S. history.

But the Supreme Court dashed their hopes Wednesday, deciding to cut the punitive damages for the 1989 Exxon Valdez disaster to $507.5 million. That translates to an average of $15,000 per victim.

''I always felt that big oil was going to win,'' said Lytle, 56. ''But now I found out what true meaning of punitive damages is: puny.''

A jury decided in 1994 that Exxon should pay $5 billion in punitive damages. In 2006, a federal appeals court cut that verdict in half.

Wednesday's decision to reduce the amount to one equal to about four days worth of Exxon Mobil's last quarter profits was hailed by the business community and decried by environmentalists and Alaskans.

''This turns America's resources to the oil industry and only the U.S. Congress can do something about it,'' said Jim Ayers, vice president of the advocacy group Oceana. ''If the Congress doesn't act, this means that America's resources, including our marine life, are now in serious jeopardy and can be bought and destroyed for a mere pittance.''

Justice David Souter wrote for the court that punitive damages may not exceed what the company already paid to compensate victims for economic losses, or $507.5 million.

The 5-3 ruling, which reduced the amount owed by 80 percent, comes almost two decades after the Exxon Valdez supertanker ran aground, spurting 11 million gallons of crude into the rich fishing waters of Prince William Sound that so many Cordova residents rely on for their livelihoods.

''I'm not too surprised,'' said Derek Blake, 25, who was a young child when he began fishing there with his father. ''I thought we might get $1 billion, but it was always in the back of my head we could get nothing.''

Robert J. Kopchak lost a quarter of his earnings when the Pacific herring fishery crashed in the early 1990s. Adding to his family's burden at the time, he still owed thousands of dollars on two herring permits that are worthless today.

''It really hurts,'' he said of Wednesday's ruling. ''It gives big business the formula they need to calculate the cost of their actions when they destroy the environment. This gives them the formula to calculate their risk, period.''

Sylvia Lange, also of Cordova, used to fish commercially for salmon and haul for the doomed herring fishery. But for her, the spill was about more than lost money.

It also was about the end of Alaska Native traditions and a subsistence lifestyle for several villages in the region. Because of the spill, many Alaska Natives were forced to stop harvesting seal, salmon and herring roe and move to urban areas, never to return, said Lange, who is part Aleut and Tlingit.

''A cultural link was definitely broken,'' she said.

The spill killed hundreds of thousands of birds and other marine animals, inflicting environmental injuries that have not fully recovered, according to numerous scientific studies.

Exxon Mobil maintained that many studies found the area healthy and thriving, countering findings of continuing damage. The company, which posted a $40.7 billion profit last year, had said punitive damages would be excessive punishment on top of the $3.4 billion in cleanup costs, compensatory payments and fines it already has paid.

''The Valdez oil spill was a tragic accident and one which the corporation deeply regrets,'' Irving, Texas-based Exxon Mobil said in a statement Wednesday. ''We know this has been a very difficult time for everyone involved. We have worked hard over many years to address the impacts of the spill and to prevent such accidents from happening in our company again.''

On the question of whether Exxon Mobil was liable for punitive damages at all, the court split 4-4, which leaves standing the appeals court opinion saying the company was liable. Justice Samuel Alito, who owns Exxon Mobil stock, took no part in the case.

First-quarter profits at Exxon Mobil were $10.9 billion. The company's 2007 profit was $40.6 billion.

[Margaret Diann]

Exxon Valdez ruling worries environmental watchdogsOil companies say they'll still focus on safetyBy ROBERT McCLUREP-I REPORTERMy thoughts on this topic

[revwardoc]

http://articles.moneycentral.msn.com...mentid=8513846

Many Americans are struggling to make ends meet because of $75 and $100 trips to the gas station.

Executives at oil companies are getting rich because of those same trips. And what do those CEOs have to say for themselves?

"It's not our fault" -- or something along those lines.

Big Oil CEOs are pulling down record pay even as their companies tacitly concede they didn't do anything extra to earn it. When anyone asks why gasoline costs $4.50 a gallon, they cite factors beyond their control, such as speculators or global demand.

That doesn't stop these CEOs from cashing in. Their pay hinges largely on two things: profit and stock price. It's no surprise that an oil company's profit would rise with the price of oil, as would its stock price. The CEO doesn't have to be a genius. A pulse will suffice.

"They are getting a gift for being in the right place and being lucky," said Mark Van Clieaf of MVC Associates International, a consulting company that advises boards on pay for performance.

And don't buy the pleas of innocence. These CEOs negotiated pay packages that compensate them with millions of dollars during normal years -- and during times like now, stock awards propel their pay into the stratosphere.

Chief executives at big oil companies such as ExxonMobil (XOM, news, msgs), Chevron (CVX, news, msgs) and ConocoPhillips (COP, news, msgs) earned from $15 million to $21.7 million last year, well above the $9.9 million median for CEOs at S&P 500 ($INX) companies, according to The Corporate Library. Plus, these energy company CEOs are now sitting on hundreds of millions of dollars worth of incentive stock and options grants.

They drink your milkshake:
ExxonMobil chief Rex Tillerson made $21.7 million last year, according to Equilar, an executive compensation research firm.

Tillerson's pay included a bonus of $3.36 million. In addition, he was sitting on about $77.9 million worth of unvested incentive stock, thanks to an increase in ExxonMobil's stock price last year to $95 a share from $63.

Why did Tillerson make so much more than the average CEO last year? By the company's own admission, you can't attribute it to his management skills. Instead, Tillerson realized an enormous amount of wealth because much of his pay was linked to short-term metrics such as increases in ExxonMobil's stock price and net income, factors driven primarily by the price of oil.

After all, when it comes to the price of oil or gasoline at the pump, Tillerson or ExxonMobil have little control, said J. Stephen Simon, a company senior vice president and board member, when he testified in May before the Senate Judiciary Committee.

"It's not our profitability in this business that's driving the higher price that consumers pay. It's the raw materials that we have to purchase on the open market to produce those products for our customers," said Simon, blaming scarcity and geopolitical uncertainty.

ExxonMobil said executive pay isn't all linked to short-term metrics, though. Last year, for example, 60% of Tillerson's compensation consisted of restricted stock that wouldn't vest for 10 years or until retirement, whichever period was longer.

The company also links some portion of executive pay to strategy development and to improvements to safety, health and environmental impact. But it didn't say how much.

At Chevron, chief David O'Reilly made $15.7 million last year, according to Equilar, including $3.6 million in bonus pay. O'Reilly had $26.3 million worth of unvested stock grants at the end of the year.

Like Tillerson, much of O'Reilly's salary is linked to short-term metrics that include earnings and the movement of the stock price.

Chevron Vice Chairman Peter Robertson, in essence, conceded O'Reilly's bonus pay had little or nothing to do with his management skills. That's because, he said, Chevron isn't to blame for the soaring cost of crude in the world markets. Yet it's those same high crude prices that helped Chevron perform so well last year, leading to executive bonuses.

Chevron said O'Reilly got no increase in base pay last year and that it links executive pay to company performance relative to peers. However, the company makes it difficult to judge how challenging this hurdle is because it does not reveal how much the company has to outperform peers for Chevron executives to get bonuses.

Robertson drew laughs during the Judiciary Committee hearing when he said he couldn't remember whether he made more than $4 million. "You know, if I made over $4 million a year, I probably wouldn't remember either," Sen. Patrick Leahy, D-Vt., responded.

ConocoPhillips CEO James Mulva made $15 million last year, including a $3.4 million bonus. He also had at least $234 million worth of unvested performance stock, thanks to an increase in the company's stock price to $90 a share from $68 during 2007.

Like Chevron and Exxon Mobil, ConocoPhillips readily concedes Mulva benefited from rising oil prices. His pay is tied to shareholder return, return on capital and income per barrel of oil, factors that are affected by the price of oil.

Part of the problem is that U.S. oil companies aren't investing enough in the millions of acres of "untapped" lease holdings they have in the U.S., said Benjamin Cardin, D-Md., one of the senators who questioned energy company execs in the Judiciary Committee hearing in May. He also thinks they fail to put enough money into developing renewable-energy resources. Spending more in both of these areas could increase the security of the country's energy supplies or bring down the cost of energy in the long run, he said.

Cardin believes legislation may be needed to impose a "windfall" tax if oil companies fail to invest more in the U.S. and in renewable energy.

"They like the status quo," he said. "They are very happy with this. If energy prices go up even more, they are going to make even more money. I do think there is a legitimate concern about top management profiteering from the economic vulnerabilities of our country."

Exploration investments often take many years to pay off, said consultant Van Clieaf, whereas the executives' pay packages are typically tied to relatively short, three-year averages. "There is a disconnect," he said.

To fix the problem, he said, more compensation should be linked to long-term factors such as the average growth in proven reserves over three to five years, measures of how much is spent on exploration and whether it pans out, or consistent increases in the percentage of profits from renewable-energy sources.

Another part of the problem is that the rewards oil execs are enjoying now were set up years ago, when few people thought oil prices would go up so much.

"I don't think anybody ran a sensitively analysis and asked what would happen if oil went to $100 or $150 a barrel," Cardin said. "If they had, they would have said, 'Oh, shoot, that executive is going to get that much?'"

The energy companies all told the Judiciary Committee that they are doing their part.

Chevron's Robertson said his company's capital budget for new energy projects this year is $23 billion, triple what the company spent in 2004. "We're an investing machine," he said. He also said Chevron is a leading producer of geothermal energy.

ConocoPhillips' Lowe said his company has reinvested 106% of its income on average over the past six years to increase oil and gas supplies, expand refining capacity, and develop renewable fuels.

ExxonMobil's Simon said the company had invested $355 billion in new energy projects over the past five years, "which is more than we earned during this same period." But it's still not a huge number compared with its $1.7 trillion in revenues during that period.

Chevron does appear to be reinvesting in development at a decent rate. But in the cases of ConocoPhillips and ExxonMobil, I'm not buying it. The latter two are giving most of their newfound wealth back to shareholders rather than deploying it to find new reserves.

That's good for shareholders, including the well-heeled CEOs. But it doesn't do much to bring down energy prices by increasing production levels.

[Margaret Diann]

Exxon case could drag on despite ruling
Plaintiffs still waiting for actual payout
By Lee Revis
Editor, Valdez Star

Last Wednesday's ruling by the U.S. Supreme Court that reduced the monetary award in punitive damages that Exxon Mobil must pay to Alaskans negatively affected by the 1989 oil spill has brought little closure to many of the plaintiffs in the case, who are still waiting to collect on the reduced amount the court ruled the company must pay plaintiffs.

It isn't just the greatly reduced reward that is galling many of the plaintiffs, that numbered over 32,000 across the state when the class action was won by plaintiffs back in 1995.

When the Supreme Court made its ruling last Wednesday, June 25, which reduced the punitive damages Exxon must pay from $2.5 billion to a little over half a billion dollars, the case was automatically returned back to the Ninth Circuit Court of Appeals, which will now have to revise its earlier ruling on the amount, which it had already reduced from $5 billion to $2.5 billion in an earlier ruling. The case will then bounce back to the federal court in Anchorage which will then disburse the funds – if Exxon does not fight to withhold interest on the reduced award of $507 million. With interest, the total amount in punitive damages would total almost $1 billion in damages to the plaintiffs, many of whom have died over the ensuing years.

Without interest, the individual payout to plaintiffs will average $15,000 each, about $30, 000 if interest is included. However, the awarded damages are not figured on an average, and many plaintiffs will see little or no compensation, while others will see larger amounts, though still far less than they would have if the court had upheld the original award.

Reaction to the court's decision by Alaska's elected officials was swift – and negative.


"We are extremely disappointed that the Supreme Court has chosen to reduce the punitive damages amount from $2.5 billion to $507.5 million," reads a joint statement issued by Alaska's small congressional delegation, made up of Representative Don Young and Senators Lisa Murkowski and Ted Stevens. "Three times previously, lower courts have ruled on the amount of damages and the Supreme Court, in our opinion, should have allowed the $2.5 billion judgment to stand. Today's ruling adds insult to injury to the fishermen, communities and Alaska natives who have been waiting nearly 20 years for proper compensation following the worst environmental disaster in our nation's history."

Alaska Governor Sarah Palin's first reaction was no less critical.

"I am extremely disappointed with today's decision by the U.S. Supreme Court," said Palin, "It is tragic that so many Alaska fishermen and their families have had their lives put on hold waiting for this decision. My heart goes out to those affected, especially the families of the thousands of Alaskans who passed away while waiting for justice."

The Exxon Valdez oil spill, which fouled an estimated 1,300 feet of Alaska's shoreline, spilled at least 11 million gallons of crude oil into Prince William Sound when the tanker ran aground of Bligh Reef on Good Friday, March 24 back in 1989. It is still considered one of the worst oil spills in the world, and is still the largest oil spill in U.S. history.

Hundreds of thousands of birds and marine mammals were killed in the resulting spill, which also deprived thousands of fisherman and subsistence users of their livelihoods.

Commissioner of the Alaska Department of Fish and Game, Denby Lloyd, says the negative impacts of the Exxon Valdez spill are still negatively effecting marine life in the Sound.

"The fish and wildlife, as well as the people, of Alaska and Prince William Sound are still feeling the harmful effects of Exxon's actions to this date," said Lloyd. "It will be years more before they fully recover from this tragedy."

Arguably, the most conspicuous and long-lasting impact of the spill was the collapse of the multi-million dollars herring fishery, which many fishermen and former fishermen in Cordova blame for the lingering downturn in the area's economy.

While the news of the verdict has left many of plaintiffs bitter and angry, business interests across the country hailed the verdict as a victory for corporate interests, which have long sought to stem the tide of multi-billion dollar verdicts in punitive damages that are often awarded to aggrieved parties in corporate lawsuits.

First-quarter profits for 2008 at Exxon Mobil were $10.9 billion and the company's 2007 profit alone was $40.6 billion.

http://www.valdezstar.net/03082006story_two.html

What happened in Valdez, 1989?

http://www.valdezlink.com/re/myletertoama.htm#causes

[Advisor]

"liberty and justice for all"...sheeeeeeeeeee-it. yeah, right. Another 'merican myth.