The arrangement will mean Rex Tillerson meets the conflict of interest requirements for the role, Exxon said.

The firm said it would cancel the two million shares Mr Tillerson was due to receive as part of its executive pay programme and put the equivalent cash into an independently managed trust.

Mr Tillerson left Exxon on 31 December.

The payout, which will only take place if Mr Tillerson is confirmed in the new role, is aimed at addressing concerns the former Exxon executive could favour the oil giant, or his own interests while in office.

The 64-year-old Texan worked for Exxon Mobil for 40 years, including in the US, Yemen and Russia.

His nomination has come under intense scrutiny over his perceived close ties with Russian President Vladimir Putin, and for the potential benefits for Exxon and the oil industry more broadly if he presides over the State Department.

Mr Tillerson was due to retire in March this year, but the date was brought forward to 31 December after he was nominated by President-elect Trump.

Exxon said the independently managed trust would be banned from investing in Exxon shares but could still buy other assets.

Mr Tillerson will receive payouts from the trust over the next 10 years, with the timing in line with when he was due to receive them originally.

The exact amount of money transferred into the trust will be $3m less than the market value to meet federal ethics guidelines.

In total, Mr Tillerson will give up about $7m, compared with what he would have been paid had he retired in March as he had planned to do before the nomination, Exxon said.

Mr Tillerson had spent his entire career working for Exxon. He joined the company as a production engineer, fresh from University of Texas, Austin, and worked his way up to take the top job in 2006.

Wall Street connections

Confirmation of the compensation arrangement came as Mr Trump said he would nominate Walter "Jay" Clayton, a lawyer at Sullivan & Cromwell, who advises clients on major Wall Street deals, to head the US financial watchdog, the US Securities and Exchange Commission.

"Jay Clayton is a highly talented expert on many aspects of financial and regulatory law, and he will ensure our financial institutions can thrive and create jobs while playing by the rules at the same time," Mr Trump said in a statement.

Mr Clayton is the latest Trump choice with close Wall Street connections.

Mr Trump has already nominated Goldman president Gary Cohn to lead the White House National Economic Council.

Mr Cohn's former Goldman colleague Steven Mnuchin has been chosen as the new incoming Treasury Secretary and another Goldman alumni Steve Bannon will be a new senior White House adviser.