May 11, 2011 / 4:58 PM / 7 years ago

UPDATE 2-Oil tax plans "discriminatory"-Conoco CEO

* ISS opposed pay measure passes

* Oil tax plans “discriminatory” - CEO

* Gasoline prices seen staying high - CEO (Adds comments about pending tax proposals, shareholder vote on pay, byline)

By Anna Driver

HOUSTON, May 11 (Reuters) - Tax proposals targeting the largest oil companies are discriminatory and will lead to higher gasoline prices and job losses, ConocoPhillips Chief Executive Officer James Mulva said on Wednesday.

Democratic U.S. Senators introduced a bill on Tuesday that would repeal certain tax deductions used by the five biggest oil companies, freeing up $21 billion over a decade to help ease the budget deficit.

“The real impact is going to be less investment made by our industry,” Mulva told reporters after ConocoPhillips’ annual meeting. “If there is less investment, there is going to be less production and less production means higher prices for consumers.”

The proposed bill would modify foreign tax credit rules that companies use to lower their U.S. tax payments. It would also limit deductions of income attributable to oil and natural gas production, and eliminate domestic manufacturing tax deductions for the companies.

Mulva, Exxon Mobil CEO Rex Tillerson and other oil executives are due to testify at a Senate Finance Committee hearing in Washington on Thursday.

The legislation is aimed at ConocoPhillips, Exxon, Chevron (CVX.N) and the U.S. operations of Royal Dutch Shell (RDSa.L) and BP Plc (BP.N).


Gasoline prices at the pump probably will not fall far from current levels around $4 per gallon in the near future as crude oil prices remain strong for the foreseeable future, the executive said.

“I don’t think we’re going to see gas prices go back to $3 anytime soon,” Mulva said.

The oil company expects crude oil prices to range from $80 to $110 for the long term, supported by demand from emerging economies.

Shareholders approved, over significant opposition, an advisory vote on the company’s executive pay.

In an April report, closely tracked proxy advisory firm ISS urged ConocoPhillips shareholders to vote against the company’s executive compensation plan, citing lucrative tax breaks for two new hires.

Excise taxes for certain executives are aimed at limiting the size of so-called “golden parachutes” in the event of a change in control of a company. Many companies “gross-up” payments to the executives in a bid to make up for the stiff 20 percent tax penalty.

The gross-ups — which guarantee full payments, free of deductions or withholdings — were awarded to former Exxon executive Alan Hirshberg and Greg Garland, who was chief executive of Chevron Phillips Chemical Co, a joint venture of ConocoPhillips and Chevron.

Fifty-eight percent of ConocoPhillips shareholders voted in favor of the company’s compensation plan, according to preliminary voting totals.

Shares of ConocoPhillips fell 3 percent to $72.43 at mid-afternoon on the New York Stock Exchange, in line with a 3 percent drop in the CBOE oil index .OIX. (Editing by Derek Caney, Robert MacMillan and Richard Chang)

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