Rex Tillerson, ExxonMobil Strike Deal to Sever Ties if He's Confirmed Secretary of State

— -- ExxonMobil announced Tuesday night that its board of directors has reached an agreement with the oil and gas company's former chairman and chief executive officer to comply with conflict of interest requirements, if he is indeed confirmed secretary of state.

Tillerson's confirmation hearings are slated to begin next week.

According to an ExxonMobil press release, the net effect of the agreement is "a reduction of approximately $7 million in compensation" owed to Tillerson, who retired on December 31 after 40 years of service with the multinational company.

In addition to the agreement with ExxonMobil, Tillerson has also "committed" to the State Department that he would sell the more than 600,000 shares in ExxonMobil he currently owns, the release said.

"Under the agreement developed in consultation with federal ethics regulators, if Tillerson is confirmed as secretary of state, the value of more than 2 million deferred ExxonMobil shares that he would have received over the next 10 years would be transferred to an independently managed trust and the ExxonMobil share awards would be cancelled," ExxonMobil said in the release. "The trust would be prohibited from investing in ExxonMobil and the trustee would manage the assets consistent with government ethics rules. Payments to Tillerson from the trust would be subject to the same 10-year schedule that the cancelled awards would have had if they had continued in place."

In regards to the trust, ExxonMobil says, "The one-time payment to the trust would be equal to the value of Tillerson's cancelled shares based on a volume-weighted average price per share. Consistent with guidance from federal ethics regulators, the value would be reduced by about $3 million."

The agreement also states limitations to be placed on Tillerson's involvement in the oil and gas industries.

"The trust would include forfeiture rules that would prohibit Tillerson from working in the oil and/or gas industry during the 10-year payout period," ExxonMobil said. "The trust rules dictate that in the event of forfeiture, the money would be distributed to one or more charities involved in fighting poverty or disease in the developing world. Neither Tillerson nor ExxonMobil would have any control over the selection of the charities."

The agreement also addresses the millions of dollars in cash bonuses and health benefits Tillerson, 64, of which he is eligible.

"Tillerson would also surrender entitlement to more than $4.1 million in cash bonuses, scheduled to pay out over the next three years, and other benefits such as retiree medical and dental benefits, and administrative, financial and tax support," ExxonMobil said.