Oil price drop: Bosses at top US firms won’t have their pay cut

The dramatic fall in oil prices since the middle of 2014 will not affect the pay of those working at the top of the industry.

 

According to compensation consultants and investors who spoke to Reuters, the chief executives at the largest oil companies in the US will not experience reductions in their total pay, despite investor pressure to make compensation packages smaller. 

 

The fall in value of the commodity, driven by an oversupply relative to demand, is causing earnings and revenue drop for most oil firms. 

 

Cost reductions are going to have to be made somewhere as a result, but the generous packages paid to executives when the oil price was higher will largely stay the same, particularly in terms of awards for 2014 performance.

 

The fall in oil price didn't have a negative impact on profits until late in the second half of 2014, with many companies' shares finishing the year where they started.

 

“2014 is going to look like a pretty good year for most," said Mike Halloran, senior partner and executive compensation specialist at the Dallas office of consulting firm Mercer. Most US oil companies will release their full- year results in the next few months.

 

In general, oil company chief executives earn more than bosses at other types of company – in 2013, they received an average of  $7.3m (£4.79m) in total pay, including salaries, bonuses, commission, allowances and insurance. This compared to $5.3m (£3.48m) among all chief executives in the Russell 3000.