The Case of the Colossal Compensation: ExxonMobil

Ali Noorda, Simon Liu, Joe Moxon

Case of the Colossal Compensation 2 Table of Contents

Background3

External Environment..3

Industry....5

Client7

The Product, Service, or Issue...10

Promotions.11

Market Share..12

Competition13

Resources...20

SWOT Analysis.21

Public Profiles22

Situation Analysis..26

Core Problem/Opportunity.26

Communications Plan....26

References..27

Case of the Colossal Compensation 3

Background

1. External Environment

Economic conditions: The demand for energy and petrochemicals correlates

closely with general economic growth rates. The occurrence of recessions or

other periods of low or negative economic growth will typically have a direct

adverse impact on our results. Other factors that affect general economic

conditions in the world or in a major region, such as changes in population

growth rates or periods of civil unrest, also impact the demand for energy and

petrochemicals. Economic conditions that impair the functioning of financial

markets and institutions also pose risks to ExxonMobil, including risks to the

safety of our financial assets and to the ability of our partners and customers to

fulfill their commitments to ExxonMobil.

Access limitations: A number of countries limit access to their oil and gas

resources, or may place resources off-limits from development altogether.

Restrictions on foreign investment in the oil and gas sector tend to increase in

times of high commodity prices, when national governments may have less need

of outside sources of private capital. Many countries also restrict the import or

export of certain products based on point of origin.

Restrictions on doing business: As a U.S. company, ExxonMobil is subject to

laws prohibiting U.S. companies from doing business in certain countries, or

restricting the kind of business that may be conducted. Such restrictions may

provide a competitive advantage to our non-U.S. competitors unless their own

home countries impose comparable restrictions.

Case of the Colossal Compensation 4 Lack of legal certainty: Some countries in which we do business lack well-

developed legal systems, or have not yet adopted clear regulatory frameworks for

oil and gas development. Lack of legal certainty exposes our operations to

increased risk of adverse or unpredictable actions by government officials, and

also makes it more difficult for us to enforce our contracts. In some cases these

risks can be partially offset by agreements to arbitrate disputes in an international

forum, but the adequacy of this remedy may still depend on the local legal

system to enforce an award.

Regulatory and litigation risks: Even in countries with well-developed legal

systems where ExxonMobil does business, we remain exposed to changes in law

(including changes that result from international treaties and accords) that could

adversely affect our results, such as increases in taxes or government royalty

rates (including retroactive claims); price controls; changes in environmental

regulations or other laws that increase our cost of compliance or reduce or delay

available business opportunities (including changes in laws related to offshore

drilling operations, water use or hydraulic fracturing); adoption of regulations

mandating the use of alternative fuels or uncompetitive fuel components;

government actions to cancel contracts or renegotiate terms unilaterally; and

expropriation. Legal remedies available to compensate us for expropriation or

other takings may be inadequate. We also may be adversely affected by the

outcome of litigation or other legal proceedings, especially in countries such as

the United States in which very large and unpredictable punitive damage awards

may occur.

Security concerns: Successful operation of particular facilities or projects may

be disrupted by civil unrest, acts of sabotage or terrorism and other local security

Case of the Colossal Compensation 5 concerns. Such concerns may require us to incur greater costs for security or to

shut down operations for a period of time.

Climate change and greenhouse gas restrictions: Due to concern over the risk

of climate change, a number of countries have adopted or are considering the

adoption of, regulatory frameworks to reduce greenhouse gas emissions. These

include adoption of cap and trade regimes, carbon taxes, restrictive permitting,

increased efficiency standards and incentives or mandates for renewable energy.

These requirements could make our products more expensive, lengthen project

implementation times and reduce demand for hydrocarbons, as well as shifting

hydrocarbon demand toward relatively lower-carbon sources such as natural gas.

Current and pending greenhouse gas regulations may also increase our

compliance costs, such as for monitoring or sequestering emissions.

2. Industry

Supply and Demand: The oil, gas and petrochemical businesses are

fundamentally commodity businesses. This means ExxonMobils operations and

earnings may be significantly affected by changes in oil, gas and petrochemical

prices and by changes in margins on refined products. Oil, gas, petrochemical

and product prices and margins in turn depend on local, regional and global

events or conditions that affect supply and demand for the relevant commodity.

Other demand-related factors: Other factors that may affect the demand for oil,

gas and petrochemicals, and therefore impact our results, include technological

improvements in energy efficiency; seasonal weather patterns, which affect the

demand for energy associated with heating and cooling; increased

competitiveness of alternative energy sources that have so far generally not been

Case of the Colossal Compensation 6 competitive with oil and gas without the benefit of government subsidies or

mandates; and changes in technology or consumer preferences that alter fuel

choices, such as toward alternative fueled vehicles.

Other supply-related factors: Commodity prices and margins also vary

depending on a number of factors affecting supply. For example, increased

supply from the development of new oil and gas supply sources and technologies

to enhance recovery from existing sources tend to reduce commodity prices to

the extent such supply increases are not offset by commensurate growth in

demand. Similarly, increases in industry refining or petrochemical manufacturing

capacity tend to reduce margins on the affected products. World oil, gas and

petrochemical supply levels can also be affected by factors that reduce available

supplies, such as adherence by member countries to OPEC production quotas and

the occurrence of wars, hostile actions, natural disasters, disruptions in

competitors operations or unexpected unavailability of distribution channels that

may disrupt supplies. Technological change can also alter the relative costs for

competitors to find, produce and refine oil and gas and to manufacture

petrochemicals.

Other market factors: ExxonMobils business results are also exposed to

potential negative impacts due to changes in currency exchange rates, interest

rates, inflation and other local or regional market conditions. We generally do not

use financial instruments to hedge market exposures. (Learn about

ExxonMobils)

Case of the Colossal Compensation 7 3. Client

History: Over the last 125 years, ExxonMobil has evolved from a regional

marketer of kerosene in the U.S. to the largest publicly traded petroleum and

petrochemical enterprise in the world.

Scope of ExxonMobil: Today they operate in most of the world's countries and

are best known by their familiar brand names: Exxon, Esso and Mobil. They

make the products that drive modern transportation, power cities, lubricate

industry and provide petrochemical building blocks that lead to thousands of

consumer goods. (Learn about the history)

Government sponsorship of alternative energy: Many governments are

providing tax advantages and other subsidies and mandates to make alternative

energy sources more competitive against oil and gas. Governments are also

promoting research into new technologies to reduce the cost and increase the

scalability of alternative energy sources. We are conducting our own research

efforts into alternative energy, such as through sponsorship of the Global Climate

and Energy Project at Stanford University and research into hydrogen fuel cells

and fuel-producing algae. Our future results may depend in part on the success of

our research efforts and on our ability to adapt and apply the strengths of our

current business model to providing the competitive energy products of the

future. See Management Effectiveness below.

Management Effectiveness: In addition to external economic and political

factors, our future business results also depend on our ability to manage

successfully those factors that are at least in part within our control. The extent to

which we manage these factors will impact our performance relative to

Case of the Colossal Compensation 8 competition. For projects in which we are not the operator, we depend on the

management effectiveness of one or more coventurers whom we do not control.

Exploration and development program: Our ability to maintain and grow our

oil and gas production depends on the success of our exploration and

development efforts. Among other factors, we must continuously improve our

ability to identify the most promising resource prospects and apply our project

management expertise to bring discovered resources on line on schedule.

Project management: The success of ExxonMobils Upstream, Downstream

and Chemical businesses depends on complex, long-term, capital intensive

projects. These projects in turn require a high degree of project management

expertise to maximize efficiency. Specific factors that can affect the performance

of major projects include our ability to: negotiate successfully with joint

venturers, partners, governments, suppliers, customers or others; model and

optimize reservoir performance; develop markets for project outputs, whether

through long-term contracts or the development of effective spot markets;

manage changes in operating conditions and costs, including costs of third party

equipment or services such as drilling rigs and shipping; prevent, to the extent

possible and respond effectively to unforeseen technical difficulties that could

delay project startup or cause unscheduled project downtime; and influence the

performance of project operators where ExxonMobil does not perform that role.

Operational efficiency: An important component of ExxonMobils competitive

performance, especially given the commodity-based nature of many of our

businesses, is our ability to operate efficiently, including our ability to manage

expenses and improve production yields on an ongoing basis. This requires

Case of the Colossal Compensation 9 continuous management focus, including technology improvements, cost control,

productivity enhancements and regular reappraisal of our asset portfolio.

Research and development: To maintain our competitive position, especially in

light of the technological nature of our businesses and the need for continuous

efficiency improvement, ExxonMobils research and development organizations

must be successful and able to adapt to a changing market and policy

environment.

Safety, business controls and environmental risk management: Our results

depend on managements ability to minimize the inherent risks of oil, gas and

petrochemical operations and to control effectively our business activities. We

apply rigorous management systems and continuous focus to workplace safety

and to avoiding spills or other adverse environmental events. For example, we

work to minimize spills through a combined program of effective operations

integrity management, ongoing upgrades, key equipment replacements and

comprehensive inspection and surveillance. Similarly, we are implementing cost-

effective new technologies and adopting new operating practices to reduce air

emissions, not only in response to government requirements but also to address

community priorities. We also maintain a disciplined framework of internal

controls and apply a controls management system for monitoring compliance

with this framework. Substantial liabilities and other adverse impacts could result

if our management systems and controls do not function as intended. The ability

to insure against such risks is limited by the capacity of the applicable insurance

markets, which may not be sufficient.

Case of the Colossal Compensation 10 Preparedness: Our operations may be disrupted by severe weather events,

natural disasters, human error and similar events. For example, hurricanes may

damage our offshore production facilities or coastal refining and petrochemical

plants in vulnerable areas. Our ability to mitigate the adverse impacts of these

events depends in part upon the effectiveness of our rigorous disaster

preparedness and response planning, as well as business continuity planning.

(Learn about ExxonMobils)

4. The Product, Service or Issue

The issue at hand is the public perception towards compensation of

ExxonMobils executivesparticularly the CEOs compensation package. Detractors of

current executive compensation are focused on its high monetary value relative to the

salary of the average worker. By understanding the characteristics, history, advantages

and disadvantages of executive compensation, ExxonMobil can craft a strong

communications plan for its critics more effectively.

Characteristics: There are a number of factors to consider regarding executive

pay, such as what the compensation actually consists of and what its basis is.

CEO compensation packages typically consist of a combination of a base salary

and bonuses, stock options and other performance-based incentives. As a general

rule, only about 20 percent of a CEOs compensation is base pay, the rest is made

up of incentives. (Salary.com)

Executive compensation is based on a number of different factors; these factors

include competitive salaries for similar positions, as well as the sheer breadth of

responsibilities accorded to an executive:

Case of the Colossal Compensation 11 A chief executive officer plans and directs all aspects of an organization's

policies, objectives and initiatives. CEOs may require a bachelor's degree with at

least 15 years of experience in the field. They on experience and judgment to

plan and accomplish goals, and may preside over the board of directors.

(Salary.com)

Compensation is also based on the executives ability to meet performance

objectives and generate profit for the organization.

Histories: Historically, the compensation for corporate executives has been fairly

high relative to the average worker. However, the CEO-to-worker compensation

ratio has increased significantly in recent years. While the ratio was 20.1-to-1 in

1965, it grew to 272.9-to-1 in 2012, far higher than it was in the 1960s, 1970s,

1980s or 1990s. (Mishel, 2013)

Advantages: The high compensation for ExxonMobil executives is based on

industry standards and sound business practices. The competitive salaries serve

to keep executives with ExxonMobil while incentivizing them to perform well.

Disadvantages: Critics of high executive compensation argue that it does not

have an impact on the companys actual success. In addition, critics say that a

focus on extrinsic, monetary motivation undermines intrinsic motivation.

(HR.com)

5. Promotions

While there have not been many attempts to address public concerns on

executive compensation, there have been several communications campaigns by

competitors that try to repair brand image as a whole.

Case of the Colossal Compensation 12 Successes: Companies that have embraced Corporate Social Responsibility

(CSR) have increased public perception of their brand and contribute to a greater

level of sustainability, while increasing profits and competitiveness. (Garcia-

Rodriguez, 2013)

Failures: A lackluster response to public condemnation can lead to long-term

damage of the brand such as when BP failed to adequately respond to its oil spill

in the Gulf of Mexico. Because of this, it likely faces a similar black eye [as

Exxon], one that will last decades. (Mulkern, 2010)

6. Market Share

In order to fully understand Exxons executive compensation, it is important to

compare it to other companies in the same industry.

Company Executive Compensation (2013)

Total Profit (2013)

Pay-to-Profit Ratio

ExxonMobil $76,001,442 $32.6 billion

.0023

Royal Dutch Shell

$7,211,362 $16.7 billion

.0004

BP $40,314,300 $23.8 billion

.0017

(Source: Google Finance)

Case of the Colossal Compensation 13 7. Competition:

Who and where the market is: Exxons market is found around the world. With

drilling projects in Iraq, Africa, South America and Alaska, it literally spans the

globe. Exxon has drilling projects on six of the seven continents. Exxons market

is not only oil consumers, but also investors and contracting partners. Exxon is a

top provider of not only fuel, but also motor oil, lubricants, aviation and marine

products, chemicals such as polyethylene (common plastics) and asphalt. In fact,

BusinessWire recently named Exxon as one of the top two polyethylene

producers in America.

Exxons major market is made up of consumers of the companys gas, power and

natural gas liquidsmore broadly: global energy and petrochemical markets.

(Exxon and Mobil)

How ExxonMobil is segmented:

Oil: American customers purchase Exxon-brand fuels, services and

lubricants for business and personal needs.

Esso is the brand name used for international customers. It provides

basically the same products Americans enjoy under the Exxon name.

Mobil is used in both America and abroad and sells high-technology fuel,

lubricants and services.

Chemical: Exxon is the largest produces in the world of aromatics,

including paraxylene and benzene. These chemicals are the building

blocks for vital products worldwide such as packaging materials, plastic

Case of the Colossal Compensation 14 bottles, automobile bumpers, synthetic rubber, solvents and countless

consumer goods.

Upstream (Unrefined Gas Extraction): Exxon offers industry

leading project execution for a variety of petroleum extraction

opportunities including conventional, heavy oil, tight gas, shale gas,

deepwater, liquefied natural gas (LNG), Arctic and sour gas projects.

Downstream (Refined Gas): Exxon is the largest refiner in the world.

The products of these refineries reach consumers via Exxons large

distributor network; gas stations that carry their goods. This distribution

network is found across the world. Exxon also operates its own retail

service stations (gas stations) that distributes directly to consumers.

Natural Gas and Power Marketing: ExxonMobil is active in almost

every market of natural gas. Thanks to its major presence in its

upstream and downstream fields, Exxon feels they are able to create

innovative solutions. This appears to be Exxons smallest market

segment.

Exxon also operates three global business-to-business segments:

1. Industrial and wholesale: targets producers of energy, pulp

and paper, primary metals, quarry and cement, processing

plants and big machines to market their oil for their large

machinery.

Case of the Colossal Compensation 15 2. ExxonMobil Aviation: targets aviators in need of jet oils,

aviation fuel, hydraulic fuel, greases, lubricants and technical

support.

3. Marine Fuels and Lubricants: have similar targets as

Aviation, except that these targets are found operating on, or in

the water.

Consumer needs, attitudes, characteristics: Although consumers are found

around the globe and range from individuals filling up their automobile to owners

of mid sized business, all consumers share a common threada need for a

byproduct of petroleum.

When it comes to attitude, consumers tend to seek out Exxon products as a

necessity and less of an auxiliary desire. Exxon products are needed to keep

machines and engines running.

According to a recent Forbes article, Exxons reputation is nearly untouchable.

Although 2013 saw an epic oil spill in Arkansas, stocks were untouched. Why?

The general public believes in the transparency of Exxon and its idea of

working good as opposed to continuous good works.

According to US Energy Information Administration research, most petroleum,

natural gas, coal and electricity (energy in general) is consumed in the United

States. China is in second, consuming only half of what the US imports

annually. Consumers both in America and around the world would have no need

for Exxon products unless they have a car or machine that need fuel, lubricant or

petrol byproducts. This means that consumers have disposable income for

Case of the Colossal Compensation 16 personal transportation or have a viable business that requires machinery or basic

building blocks like polyethylene.

How, Why, When consumers buy: Consumers can purchase Exxon products

directly off the shelf or through the pump at gas stations. Businesses can contact

Exxon online, via phone or in person at sales offices around the world.

According to Exxon reports, Exxon has seen a bumpy, yet overall upward climb

in earning since the economic downturn of 2009. Exxon peaked in the late fourth

quarter of 2010, sloped downward until 2012 and is now on the rise again. It

would appear that consumers often fall victim to the overall state of the

American economy, which also crashed in 2009, and took a slight downturn in

2012 after the presidential elections. (ExxonMobil Executive Compensation

Review, 2013)

Past and Future Customers: Exxon started as a local kerosene supplier in

Pennsylvania following an oil rush comparable to that of the gold rush in San

Francisco. American businessman John Rockefeller built on the small business,

and eventually developed Standard Oil, known for its products high quality.

Throughout the late 19th century, consumers such as Thomas Edison and the

Wright brothers used Mobil products to fuel and lubricate some of the most

significant engines in the history of mankind.

As early as 1906, Mobil products found a home in foreign countries such as

China, where kerosene lamps were used. The winner of the 1915 Indianapolis

500 was the first of many winners to use Mobil products. 1919 saw the acquiring

of a drilling company in Texas and the beginnings of new technology using

Case of the Colossal Compensation 17 microscopic fossils to find oil reservoirs. In 1920, Jersey Standard, a precursor to

Exxon, developed the first petrochemical: isopropyl alcohol.

Throughout the twenties and thirties, the companies that now make

groundbreaking discoveries in petrochemicals, oil extraction and methods of oil

discovery, especially in Texas. Customers throughout the United States, from

Amelia Earhart to the average Joe owner of a Model T Vacuum Oil and Jersey

Standard products. With the development of petrochemicals, especially the

artificial rubber butyl, Exxons customers started to expand. Butyl is essential in

the production of tires, surgical tapes, protective coatings and more. This means

that Jersey Standard was no longer just in the kerosene and petroleum business,

but was starting to engage in business-to-business interactions.

Extraction methods were born in Texas and continued to flourish in the Southern

United States. Jersey Standard continued to focus on their motor vehicle

customers by developing the first multigrade motor oil desirable for both summer

and winter use.

After fueling the first commercial Trans-Atlantic flight, Vacuum Oil officially

changes its name to Mobil oil and patents its first synthetic oil lubricant. To this

day, Mobil 1 is the top choice among automobile users around the globe.

The seventies and eighties saw further expansion when Mobil completed the first

concrete production platform in the North Sea, located between Great Britain and

Scandinavia. Jersey Standard, now officially known as Exxon, opens a facility

for biomedical sciences and environmental research in 1980. Two years later,

Exxon celebrates its 100 year anniversary, realizing in its first 100 years it has

evolved from serving simple kerosene consumers to a global market involved in

Case of the Colossal Compensation 18 every level of oil and gas extraction, production, refining, marketing and

petrochemicals manufacturing.

In the 1990s, Mobil introduces Speedpass, providing more services to their

extensive Distributor Network, or gas stations that carry their product.

In the past twenty years, ExxonMobil has furthered its reach to customers

seeking environmentally friendly fuel alternatives. ExxonMobil has partnered

with its American competitors Chevron, ConocoPhillips and Shell to pledge to be

more environmentally friendly. ExxonMobil is always growing and seeking new

consumer markets, and it appears that it will maintain this pattern.

Petrolium: Regardless of time period or the engine that ExxonMobil was

fueling, petroleum is the common denominator. These days, ExxonMobil

products are not limited to oils and lubricants like they once were. New

petroleum byproducts such as ExxonMobils wide selection of plastics, however,

still come from the same base product: petroleum. Therefore, all customers have

one thing in common, the need for a consistent and viable petroleum source.

What consumers like about the product: ExxonMobil users are pleased with

the product. The Internet is littered with far more testimonials as opposed to

complaints. Users claim that Mobil oils and lubricants minimize wear, extend

engine life and reduce environmental impact. (exxonmobil.com)

What consumers dislike about the product: Customers are displeased with gas

prices; while the quality may be high, automobile drivers around the world are

unhappy with the high prices of gasoline.

Case of the Colossal Compensation 19 What consumers like about the issue: Consumers are comfortable with the idea

of engineers and rig workers being paid high salaries.

What consumers dislike about the issue: Consumers have a problem with the

idea of paying high prices at the pump while a high-paid CEO receives tens of

millions of dollars each year in bonuses.

How consumers are reached: Customers can be reached in a variety of ways.

Business-to-business consumers must contact ExxonMobil to purchase products;

therefore ExxonMobil has their contact information.

Most direct consumers have disposable income to own an automobile or a

business. Because of this, one could also assume that consumers have access to,

and are therefore reachable via telephone, television, Internet, public advertising

space such as billboards, etc.

Competitors and their potential, competing ideas and attitudes: According to

Hoovers, ExxonMobils top competitors globally are Royal Dutch Shell,

Chevron and BP.

Royal Dutch Shell: Royal Dutch Shell differs from ExxonMobil in that it is

headquartered in The Hague, Netherlands, as opposed to the United States. Shell

offers a similar range of products when compared to ExxonMobil. Shells

website lists fuels, oils, lubricants, Shell stations and chemicals as their major

products. Shell is also competing with ExxonMobil in more than 70 countries in

both upstream and downstream businesses. Like ExxonMobil, Shell is

working to expand their environmentally friendly fuel options and expand their

customer market share.

Case of the Colossal Compensation 20 Chevron: Chevron also caters to a very similar market. Chevrons website

indicates that gasoline, refinery, extraction, lubricants, pipelines and unrefined oil

is what the company thrives off of. One thing that does make Chevron unique,

however, is their patented additives inserted in their fuel. Chevron also has its

own shipping company to transport its fuel, as opposed to other competitors that

hire a third party. Chevron is equally invested in fossil fuel replacements and

clean energy. Chevron has investments around the globe and is currently facing

heat in a lawsuit in Ecuador. Chevron has the largest natural gas holding in

Australia. ExxonMobil does not have a majority natural gas holding on any

continent.

BP: Still recovering from the spill in the Gulf of Mexico, BP is comparable to

ExxonMobil in its upstream and downstream content, and claims its focus is on

fuels, lubricants and petrochemicals. BP operates its own gas stations and has

recently started its own caf chain, Wild Bean Caf. BP, like ExxonMobil,

operates on six continents and has a strong campaign for green, renewable and

sustainable energy.

8. Resources

ExxonMobil has many outreach resources at its disposal, including: social media

outlets (Facebook and Twitter), the companys Perspectives Blog and ExxonMobil apps

for Android and iPhone users. There are also intervening publics, which could have

potential influence on key publics:

Case of the Colossal Compensation 21 Intervening Public Attitude/Current Relationship with

ExxonMobil Influential (Yes/No)

Media Negative Yes

Esso Education Foundation Positive No

Save The Tiger Fund Positive Limited

Mickelson ExxonMobil Teachers Academy

Positive Limited

Partnership with Phil Mickelson Positive Positive

Partnership with Idol Gives Back (American Idol)

Positive Limited

9. SWOT Analysis

Strengths (Internal) 1. Extensive retail presence 2. Integrated business operations 3. Interests across various asset types

Weaknesses (Internal) 1. Declining liquidity 2. Increasing production costs per barrel 3. Negative media attention since the Valdez oil

spill in 1989

Opportunities (External) 1. Global potential for undeveloped

discoveries 2. Increasing demand for petroleum

products 3. New products and capacity expansion

Threats (External) 1. Vehicle technology limiting demand 2. Water contamination concerns 3. Volatility in oil & natural gas prices

(ExxonMobil Corporation)

Case of the Colossal Compensation 22 10. Public Profiles:

a) Shareholders:

Demographic/Psychographic Data: Major shareholders are the

members of the board, who are mostly American businessmen (and two

women) who have impressive experience in top companies including

Nestle, LOreal, Goldman Sachs and others. These individuals are highly

educated and have often served as deans of respectable American

Universities. A handful of these individuals have also served in public

government positions at both federal and state positions.

Current Relationship: Positive. ExxonMobil has not seen a drop in

stock value, though their reputation may be tarnished by critics.

Influentials: Board members, peers, Wall Street thought leaders

Self-Interests: Making profit, stock value, maintaining lifestyle, integrity

of ExxonMobil

b) Employees:

Demographic/Psychographic Data: Employees of ExxonMobil are

found around the world. In fact, according to the website, they are found

in most countries. Employees can range anywhere from customer

service/call center workers, to project engineers on site that make six

figures.

Case of the Colossal Compensation 23 Current Relationship: Positive. According to employee reviews found

on indeed.com, employees from every position enjoy working for

ExxonMobil.

Influentials: Family, employers, co-workers, labor unions, peers

employed in similar field.

Self-Interests: Income, workplace environment, lifestyle, status

c) Critics of Executive Compensation:

Demographic/Psychographic Data: The demographic for this public is

difficult to attain. Most information comes from media reports with an

unclear pool of sources. Because executive compensation is an American

capitalist ideal, and the critics are emotionally charged due to a belief in

some sort of injustice, it can be assumed that the critics are low-income

individuals, both in America and abroad. These individuals probably

value social or liberal economic welfare policy. It is also likely that

these individuals are consumers of ExxonMobil products, specficially

gasoline, that are unhappy with prices at the pump.

Current Relationship: Negative. This is the main source of conflict.

Influentials: Peers, labor unions, families, employers, media

Self-Interests: Income, economic justice, American economic policy,

gas prices

d) U.S. Senate and House of Representatives:

Case of the Colossal Compensation 24 Demographic/Psychographic Data: Most US representatives are 57

years old, have a college education in business, law or public services,

most average 4.7 terms of service in the House, 87 percent identify

themselves as Christians, 82.8 percent are male and 84 percent are white.

Current Relationship: Positive, though this may change as a federal

investigation is being launched regarding executive compensation. So

far, this has no implications on ExxonMobil because it has not received

government funded bailouts.

Influentials: voters, lobbyists, other branches of government,

policymakers

Self-Interests: reelection, campaign platforms, policy, political party

alignment

e) Consumers:

Demographic/Psychographic Data: Consumers of ExxonMobil goods

are found all around in the world in every situation and economic

background. As previously explained, most have disposable income of

some sort or are owners of a business.

Current Relationship: Good. It appears that even though there are

complaints, ExxonMobils sales have not dropped.

Influentials: employers, customers, global economy, family, government

regulation

Self-Interests: wellbeing, product quality, staying in business, price

Case of the Colossal Compensation 25 f) Media:

Demographic/Psychographic Data: Backlash is coming mostly from

mainstream and liberal leaning American media. Channels from CNN all

the way down to scholarly research journals have published complaints

Current Relationship: Negative. Media is main source of complaint and

fueling the fire.

Influentials: advertisers, readers/consumers, employers, government,

other media, sources

Self-Interests: employment, maintaining market share, selling

advertising space, sharing relevant news

g) CEOs of other large companies:

Demographic/Psychographic Data: According to Forbes, eight of the

ten top earning CEOs in the country are white, and all ten of them are

male. All ten are over age 50.

Current Relationship: Positive.

Influentials: stockholders, policymakers, lobbyists, media, consumers,

employees

Self-Interests: lifestyle, approval of peers, wellbeing of their respective

company, stock value

Case of the Colossal Compensation 26 Situation Analysis

Critics of the high compensation of corporate executives do not understand the rationale

behind why many American executives are paid such high salaries. Because of ExxonMobils

unique position as the most profitable in the world, it is particularly targeted by critics.

ExxonMobil has the opportunity to justify its executives compensation to its publics.

Several obstacles could hinder the effectiveness of the communications plan. The major obstacles

include the shear size of the corporation and its executives compensation, biased media and the

lack of public trust of many large corporations since the 2008 recession.

Core Problem/Opportunity

If ExxonMobil does not address the continuous criticism of its profits and executives

salaries, then its reputation will continue to suffer.

Communications Plan

In order to repair its reputation, ExxonMobil must justify the rationale behind executive

salaries to its publics. Shareholders must understand the necessity to continue the high

compensation of its executives in order to sustain company profitability. Employees must

understand that their wages are not affected by the salaries of ExxonMobils executives. Finally,

critics of ExxonMobils executive compensation must understand that executives pay is justified

by both the profitability of the company and the standard of executive compensation in the

industry.

Case of the Colossal Compensation 27 References

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