Daily Archives: July 9, 2008

Big Oil execs’ pay packages soar to the stratosphere as Americans struggle to fill gas tanks

Did oil execs luck into record pay?

MSN Money | Jul 9, 2008

Oil stocks and oil company profits are soaring, and their CEOs’ compensation is hitting the stratosphere — even as the companies claim they’re not to blame for high oil prices.

By Michael Brush

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.

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.

Push for HPV vaccination continues despite devastating side effects

HPV vaccine’s suspected side effects cause concern; CDC says drug is safe

From nausea to paralysis — even death — the Centers for Disease Control and Prevention has received 7,800 reports of side-effects from the vaccine, Gardasil.


KVUE News | Jul 8, 2008

By MARI ALVAREZ

The shots, manufactured by Merck, are designed to protect against Human Papillomavirus (HPV) which can cause cervical cancer.

The CDC reports more than 12 million doses of the Gardasil vaccine have been distributed in the U.S. since it was licensed by the Food and Drug Administration two years ago.

Jorene McBee is a mom and a nurse. She’s considered getting her daughter vaccinated.

“The shot itself is very painful, too so I’ve had some hesitations about her getting it — they also don’t how long it’s going to last either,” said McBee.

Still, McBee feels the 7,800 reports of adverse side effects to Gardasil are not enough to out weigh the intended benefit of preventing certain types of HPV that lead to cervical cancer.

“I still recommend it — from the stand point that if that’s going to prevent cancer, then certainly it’s worth it. And from what I’ve seen, from the kids we’ve given it to at our office, they’ve all done well, besides just that it’s really painful,” said McBee.

Texas Governor Rick Perry continues to support the widespread inoculation against HPV with Gardasil. In a statement released Tuesday, he says he stands behind its use as long as the CDC says it’s safe.

Doctor Albert Gros, the chief medical officer at St. David’s South Austin Hospital, says he’s seen no reason to hesitate administering Gardasil.

“Many young women have in fact indicated that it is quite painful, but there have been no long term side effects — to my knowledge — in any of the patients that I have prescribed the medication for,” said Dr. Gros.

Out of the 7,800 complaints against Gardasil, less than 7 percent were considered serious. That’s about half the average number of complaints received for all vaccines by the CDC.

“Russian state killed former spy Alexander Litvinenko”

Marina Litvinenko looks at Boris Berezovsky during a press call on the first anniversary of her husband Alexander’s death: ‘Russian state killed former spy Alexander Litvinenko’. (photo: CHRISTOPHER PLEDGER)

Telegraph | Jul 8, 2008

By Duncan Gardham and Robert Winnett

The Russian state was behind the killing of the former secret agent Alexander Litvinenko, a senior official has disclosed in private.

“We very strongly believe the Litvinenko case to have had some state involvement, there are very strong indications that it was a state action,” the senior security official told the BBC.

Marina Litvinenko, the widow of the murdered agent, has been pressing for official recognition that the use of radioactive polonium 210 must have been state-sanctioned.

To date the Government has remained silent on the responsibility for the killing merely requesting the extradition of Andrei Lugovoi, a former KGB bodyguard who is the main suspect in the case.

Referring to a later attempt to assassinate the businessman Boris Berezovsky, who employed Litvinenko, the security source said the “continued willingness” of the domestic security branch the FSB to “consider operations against people in the West” was causing major diplomatic problems.

His comments came as the Prime Minister held a “frank” meeting with the new Russian president, Dimitry Medvedev.

During a private meeting at the G8 summit in Japan, the Prime Minister is understood to have raised the assassination of Litvinenko in London, problems faced by oil company BP operating in Russia, and the treatment of the British Council – which has been forced to close several Russian offices.

It appeared that Britain had walked away from the talks empty-handed amid signs that the Russians may have been annoyed by Mr Brown’s approach.

Mr Brown’s spokesman insisted that the meeting was “constructive and worthwhile” although neither side said that the relationship had fully recovered.

A spokesman for Mr Brown said: “Clearly we are not going to solve all the problems in one meeting. But it is important we have a constructive relationship.”

Sergey Prikhodko, an aide to the Russian President, said: “President Medvedev and UK Prime Minister Gordon Brown had frank discussions and did not avoid any ‘sharp issues’.

The two leaders spent more than an hour together with less than half of the time spent on the issues which have caused the rift between the two countries.

BP, Britain’s largest oil firm, is facing increasing problems operating in Russia. The firm has complained that its staff have been prevented from obtaining visas.

Mr Brown is understood to have raised the issue with the Russian President yesterday. Although Mr Medvedev said the issue was beyond his control, British officials are now confident that the situation may improve.

However, there is less optimism that Mr Lugovoi will be deported from Russia as has now been elected to the Russian Duma [parliament].

This week’s summit is President Medvedev’s first major appearance on the international stage since becoming president in May.

Mr Medvedev has travelled to Hokkaido in northern Japan without former President Putin who is now the Russian Prime Minister but is thought by many to still be the most powerful figure in Russia.

U.S. former state secretaries call for return of war powers to Congress

Xinhua | Jul 9, 2008

WASHINGTON, July 8 (Xinhua) — U.S. former state secretaries called for return of war powers to Congress “where they belong” in an editorial article published by The New York Times on Tuesday.

“The most agonizing decision we make as a nation is whether to go to war … the founders hoped that the executive and legislative branches would work together, but in practice the two branches don’t always consult,” said James Baker and Warren Christopher in the essay.

Baker served as the state secretary for George H. W. Bush from 1989 to 1992, and Christopher took the same position in 1993 in the Bill Clinton administration.

The two was co-chairing a bipartisan study group, the National War Powers Commission, which has proposed a new legislation requiring the president to consult lawmakers before initiating combat lasting long than a week, except in cases of emergencies.

The group considered the 1973 War Powers Resolution that was passed in response to the Vietnam War “ineffective at best and unconstitutional at worst.”

Although many have suggested that the war powers resolution be amended or replaced, their proposals to do so have not gone very far, the essay said.

Therefore, the proposed legislation by the study group, titled War Powers Consultation Act of 2009, “does not pretend to resolve the underlying constitutional issues” but to “reserve the ability of both Congress and the president to assert their constitutional war powers,” it added.

The study was begun more than one year ago when war powers became a central issue in the Iraq war debate. Democratic lawmakers tried to force President George W. Bush to end the long-lasting war.

The panel said that it had consulted more than three dozen experts and would present its findings at a Tuesday press conference.

Houston, Texas Residents Moving To City Center To Be Near Place Of Work

AHN News | Jul 8, 2008

By Vittorio Hernandez

Houston, TX (AHN) – Soaring gas prices has made Texas residents change not only their driving habits but also rethink their choice of location for residence. A proof of this is the rise of a new downtown luxury apartment tower, Houston’s first in 40 years.

The $125 million One Park Place will open in 2009. To complement the residential tower would be the $170 million Houston Pavilions, which opens in October, to provide office space, shopping, recreation and dining establishments.

The two real estate developments seeks to boost the city center’s 4,000 population and entice about 200,000 people who hold office or shop during weekdays in downtown Houston to stay in the area longer after office hours end.

The rise of a mixed-use city center reverses the trend that started in the 1970s when people opted for life in the suburbs where homes are larger and gas was a lot cheaper. New York City was the model that Washington, Atlanta and Denver copied in drawing suburban residents to live near their place of work.

For Houston Mayor Bill White it’s the city’s turn to follow their example. “People are wanting to live closer to where they work… To build street-level retail, you need residences. To attract residence, you need street-level retail,” the mayor told Bloomberg.

Aside from the two new towers, there more residential projects and two more office buildings are in the pipeline.

But even before the downtown starts to rise, Texas residents have started to cut their car fuel bills finally, after seemingly oblivious to the rise of pump prices the past dew months. Proof of this was data from the Texas Comptroller’s Office which said tax collection from gasoline fell for the second straight month in June in contrast to higher tax collection for vehicle fuel during the earlier months of the year.

John Heleman, Texas’s chief revenue estimator, explained to the Houston Chronicle the shift in driving pattern of state residents to a greater awareness to the very high price of gasoline. But fuel in the area is still cheaper at $3.94 a gallon in Houston and $3.97 across the state, compared to the national average of $4.11.

At least 80% of sunscreens fail to protect and contain cancer-causing poisons

4 out of 5 sunscreen lotions offer inadequate protection from the sun or contain harmful chemicals

Live Science | Jul 8, 2008

By Christopher Wanjek

The simple rule of sunscreen — the higher the SPF and the thicker the slather, the better — has come under doubt.

The Environmental Working Group (EWG), a Washington-based research group and habitual gadfly to the business world, has found that 4 out of 5 of the nearly 1,000 sunscreen lotions analyzed offer inadequate protection from the sun or contain harmful chemicals. The biggest offenders, the EWG said, are the industry leaders: Coppertone, Banana Boat and Neutrogena.

While 3 out of 3 industry leaders are rather upset with the EWG report, and while some dermatologists criticize it for hyperbole, the report does underscore several long-standing health concerns:

Sunscreens do not offer blanket protection from the sun and do little to prevent the most deadly form of skin cancer; reliance on them instead of, say, a hat and protective clothing, might be contributing to skin cancer; and the Food and Drug Administration has yet to issue any safety standards, mysteriously sitting on a set of recommendations drafted 30 years ago.

Subcutaneous homesick blues

Sunlight contains ultraviolet radiation, largely in two forms: UVA and UVB. Aside from sunburn, UVB exposure causes the most common forms of skin cancer — basal cell carcinoma, which is rarely deadly and mostly only disfiguring, and squamous cell carcinoma, which can turn deadly about 1 percent of the time.

UVA penetrates the skin more deeply and causes wrinkling. Recent research, however, has found that UVA exacerbates the carcinogenic effects of UVB and might cause skin cancer itself.

Most sunscreens block only UVB. And the SPF system, short for Sun Protection Factor, refers only to UVB. SPF provides an estimate of a lotion’s level of sunburn protection. If you start burning in about 30 minutes, then SPF 15 will allow you to stay in the sun 15 times longer before getting burned, in theory.

SPF of 1 zillion

Total UV protection is within reach and has been used for millennia. It’s called clothing. Unfortunately this isn’t so convenient when summertime fun calls for minimal clothing.

The EWG report takes an ax to the loose SPF claims. Almost all sunscreen lotions contain chemicals that, perhaps counter-intuitively, breakdown in the presence of sunlight. But in fact this is how they block UVB from penetrating the skin, like a castle wall protecting against cannonballs until the wall crumbles.

Notions of all-day protection, as some sunscreen products claim, or even several hours of protection are ludicrous, the EWG said, because most sunscreens start deteriorating in as quickly as 15 minutes. This doesn’t even account for sweat and casual rubbing, further reducing protection.

Also, few sun-worshipers use the recommended shot-glass-amount of lotion with each application. We merely think we are protected; few really are.

Controversy, not just skin deep

The EWG also trashed any lotion containing harmful chemicals that can easily penetrate the skin. Oxybenzone, which blocks UVA, is a main offender. The U.S. Centers for Disease Control and Prevention has found oxybenzone in the urine of just about everyone tested.

This chemical can promote DNA damage in the presence of sunlight. Oxybenzone and similar cancer-causing chemicals in sunscreens contribute to the minority view that sunscreens actually cause more and deadlier cancers than they prevent. Several small studies have found an increased risk of malignant melanoma, by far the deadliest form of skin cancer, among regular users of sunscreens.

Many zinc-based protects appear to be safe, according to the EWG. Until the FDA breaks its silence and offers some guidance, there’s the EWG list of recommendations at http://www.cosmeticsdatabase.com/special/sunscreens2008. Or you can move to Seattle.