updated 4/13/2005 6:36:47 PM ET 2005-04-13T22:36:47

Buoyed by high oil prices, Exxon Mobil Corp. had a record-breaking year in 2004 and chairman and chief executive Lee R. Raymond shared in the company's success with a $38 million compensation package, the largest U.S. oil company said Wednesday.

Exxon said that Raymond, 66, was paid $7.5 million in salary and bonus plus restricted stock worth $28 million and nearly $2.6 million more in other compensation and incentives, according to Exxon's proxy filed Wednesday with the Securities and Exchange Commission.

That was an increase from Raymond's 2003 package worth about $27.9 million, including $6.8 million in salary and bonus and $17.9 million in restricted stock.

At the end of 2004, Raymond held $138.9 million in restricted shares. He realized $43.6 million from exercising options to buy 1.79 million shares during the year, according to the proxy.

The compensation committee of Exxon's board said Raymond's package was appropriate when compared to pay for CEOs of other U.S. oil companies and major corporations, “particularly in view of the long-term performance of the company and the substantial experience and expertise that Mr. Raymond brings to the job.”

The committee said it didn't use a formula but based Raymond's salary and bonus on leadership and results measured by factors including long-term returns on capital and growth in earnings per share.

Raymond's package reflected a trend among corporations to load up CEO compensation with stock grants tied to continuing service instead of stock options.

Charles Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware, said it's easier to put a dollar figure on the grants and, if tied to company performance, they are more in line with shareholder interests than are options.

“There's nothing wrong with restricted stock, but it all depends on how much you give,” Elson said. He said one of the factors cited by Exxon's compensation committee — rising earnings per share — was easy while the company benefited from rising oil prices.

Irving-based Exxon earned a record $25.33 billion in 2004, believed to be the highest profit ever for a U.S. company after excluding earnings inflated by the sale of a business.

Exxon's 2004 revenues were also a company record: $298.03 billion. In February, the company surpassed General Electric Co. to become the largest U.S. corporation by stock market value.

Raymond has been chairman and chief executive since 1993 and a director since 1984, long before Exxon's 1998 acquisition of Mobil Corp. He is also on the board of J.P. Morgan Chase & Co.

Exxon's shares rose 25 percent in 2004. That helped increase the value of Raymond's stock grant. The stock price was $50.91 per share on the date of his grant, compared to $35.82 a year earlier.

Exxon said $100 invested in 1999 would have earned $43 by the end of 2004, compared with a return of $19 if invested in other oil industry stocks and a loss of $11 if put in a Standard & Poor's 500 index fund.

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