While the horrific oil spill by the Exxon Valdez happened all the way back in 1989 (yes that was 19 years ago!), Exxon Mobil (NYSE: XOM) is still in litigation over how much it should be forced to pay in damages. Last month, Exxon Mobil won a big victory when the Supreme Court (in a 5-3 decision) lowered the company's punitive damages from $2.5 billion all the way down to $507.5 million. While this was good news for Exxon Mobil, there was one little detail left to work out -- interest on all that money. Of course, Exxon Mobil does not want to pay that interest, and today the Supreme Court decided that a lower court needs to make this decision.
So just how much interest are we talking about here? Roughly $500 million and counting, as Exxon announced earlier that the victims of the oil spill have requested $488 million in interest. This works out to about $15,000 per victim.
What does this amount mean to Exxon? Ten hours of sales. That's right, ten hours. You would think the company would just pay the money and be done with the whole mess, but Exxon will continue to fight and will have its day in the lower court of appeals.
For the victims, today's decision is being viewed as a victory, as the victim's lead lawyer stated that is was a positive outcome for the judges to refuse Exxon's claim that the victims should not get any interest.
Exxon Mobil, on the other hand, did not seem to share that view point, stating that today's ruling was "neutral" at best, and did not favor either side over the other.
Shares of Exxon Mobil are trading down 55 cents today to $77.58.
Michael Fowlkes has worked as a stock trader for seven years and spent the last four years working as an analyst for the online investment advisory service Investor's Observer. DISCLOSURE: Mr. Fowlkes owns and/or controls diversified portfolios of long and short stock and option positions that include holdings in XOM.
Reader Comments (Page 1 of 1)
8-12-2008 @ 6:32PM
Claude Foutch said...
I too own some Exxon shares; however, this company owes its shareholders and the aggrieved fishermen, et al, a bit of fairness. The fishers did not spill the oil, it was the drunk skipper that ran the ship onto the reef. C'mon Exxon, you only make $1,500 per second. Surely you can make these people whole. Or can you? We will watch.
8-12-2008 @ 9:29PM
Claude Bullis said...
Maybe EXXON should change their name to GREED. By delaying final judgement for more than 19 years with appeal after appeal, they have parlayed the original 5 billion dollar fine into a 15 billion dollar profit. In the meantime, over 3,300 plaintiffs died and never got a penny (that should make the Exxon board proud!). By the way, where are the environmentalists? The contamination and deformed sea life is still present in the Alaska waters. One might think they'd be outraged that Exxon would be let off so lightly. Oh yeah... they're busy with the current trendy current event; global warming.
8-13-2008 @ 11:01AM
Steve in Denver said...
Good for Exxon for standing up to the "hate big oil " zenophobes (sp). The money wasn't theirs to collect interest on until a court said it was, and how much, which just happened last month. I've read several times that Alaska residents were looking forward to retiring (some in their 30's) off a big shakedow of Exxon. Shame on those lazy bastards! Life isn't a free ride (unless you're a government titisucker)
8-13-2008 @ 11:21AM
Claude Bullis said...
It's all about justice, Steve. You probably sided with O.J., too.
8-13-2008 @ 12:37PM
Ryan said...
Geez. They only made $11b last quarter. $500 mil. is a drop in the bucket.
8-15-2008 @ 10:55PM
Claude Bullis said...
It's all about justice, Steve. You probably sided with O.J., too.
8-20-2008 @ 10:02PM
cropsnoil said...
Exxon directors are a greedy bunch. They should pay the fine and be done with it. Take it out of the CEO's Golden Parachute, he will never missi it.
8-22-2008 @ 4:57AM
Destroyer said...
When I worked for Exxon I was told that the Company took out a large sum of our pension and placed it in a high risk high yield account for som period of time and earned all they would need to pay this off. Not to mention right now today Exxon has Thirty six Billion in cash. Pay it out today they are a Billion less with interest.