Our inaugural Oil Executive salary rankings show record oil prices saw oil and gas executives chalk up bumper pay
2011 was a great year to run an oil company. Brent averaged $111. New upstream markets are progressing rapidly, from pre-salt in Brazil to tight oil in the US. A new cycle of drilling in Saudi Arabia began.
Abu Dhabi is on the brink of an upstream renaissance, Kuwait’s North field development continued, and Oman has reaffirmed its commitment to some of the most advanced enhanced oil recovery programmes in the world. Iraq’s production and drilling programmes began in earnest.
The disruptions of the Arab Spring look to have brought in new governments which, while fragile, will not be prone to the depredations of the dictatorships that have been swept away.
All these factors helped top executives win raises from their boards, with an average pay hike of 20%.
On average our top 20 executive scooped $17 million in total remuneration in 2011. But are they worth it? To help answer this question we’ve ranked the 20 highest-paid oil executives, and put their pay packets alongside their company’s share price over 2011 (see page 56 for shareholder return number crunching).
For obvious reasons only private sector listed companies have been covered. The data given come from regulatory disclosures, company reports, or the estimates of credible research agencies.
Because this is Oil & Gas Middle East, only companies with a presence in the MENA region have been included.
Total pay is the sum of: base salary; bonus; stock awards; stock options where vested or valued; payouts made in 2011 under other long-term incentive plans; pension benefits; and miscellaneous compensation.
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RAY IRANI
$49.77m
Company: Occidental Petroleum
Title: Executive Chairman
Ray R. Irani is the current chairman and former chief executive officer of Occidental Petroleum, focused on corporate strategy, Middle East operations and international business development.
The protégé and successor of industry legend and long-serving Occidental CEO Armand Hammer, Irani has worked at Oxy for over 20 years.
Irani earned a total of $460 million from Oxy in 2006 on the back of a steep rise in oil prices. News of his bumper pay packets and other compensation from Oxy’s board saw Irani in the spotlight of the international press, and facing criticism from institutional investors.
Irani was pushed by investors into his current role in 2010, where he is set to stay until 2014. Despite giving up the CEO mantle, Irani remains the highest paid company oil man in the world.
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REX TILLERSON
$34.92m
Company: ExxonMobil
Title: Chairman and CEO
The man at the head of the world’s largest private sector energy company saw his compensation rise by 20% for 2011, his fifth year as CEO, buoyed by high oil prices.
Having generally outperformed its peers in shareholder returns over the last 20 years, and been ranked the most profitable company in the world by Forbes, Tillerson will feel he is worth it.
Tillerson has managed to strike deals that have eluded other supermajor CEOs, such as a huge exploration partnership with Rosneft targeting the Arctic waters in exchange for Exxon assets elsewhere.In 2011 the company secured six exploration blocks in Iraqi Kurdistan.
Tillerson pushed Exxon to buy XTO Energy, a major player in US shale gas, in 2009. With gas prices around all-time lows, Tillerson says that shale players are “losing our shirts” on shale.
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Steven I. Chazen
$31.73m
Company: Occidental Petroleum
Title: Chief Executive Officer
Compared with his predecessor Ray Irani, Steven Chazen draws a frugal wage from Oxy. Appointed to replace Irani in 2011 after spells as Chief Operating Officer and Chief Financial Officer, Chazen has a banking background, having moved into oil and gas from US bank Merrill Lynch.
On taking the reins at Oxy, Chazen vowed to keep acquisitions at the company at the heart of its growth strategy. Since then the company acquired a 40% participating interest in the Al Hosn Gas Project in Abu Dhabi to develop one of the largest gas fields in the Middle East. The 30-year joint venture with ADNOC will see Oxy invest $4 billion.
Chazen holds a PhD in geology from Michigan State University, a master’s degree in Finance from the University of Houston and a bachelor’s degree in Geology from Rutgers. He is a Director of the American Petroleum Institute.
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Clarence P. Cazalot Jr
$31.51m
Company: Marathon Oil
Title: President and CEO
A trained geologist, Cazalot doesn’t come from a tycoon background and spent much of his career doing technical work for Texaco.
After joining Marathon in 2000, Cazalot quickly improved the company’s bargaining situation with a cooperative approach to developing energy markets and pricing, putting a strategic focus on technology.
Throughout his career, Cazalot has financed acquisitions of foreign supplies by creating good relationships with research facilities and lowering production costs, and is debt averse. His corporate focus is now on gas commercialisation, and while it has to deliver the company any “breakthrough” technologies, he has had a great deal of success in the past with oil completion technologies.
Marathon’s subsidiary, Marathon Ashland Petroleum, is today the fifth largest petroleum refiner in the United States.
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James Mulva
$27.71m
Company: ConocoPhillips
Title: CEO (in 2011)
The successful separation of ConocoPhillips’s upstream and downstream businesses, which won shareholder plaudits, marked the end of Mulva’s tenure as CEO in 2011.
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John S. Watson
$ 24.72m
Company: Chevron
Title: Chairman and CEO
Watson’s pay rose over 52% in 2011 as Chevron’s shares finished 15% up on the year. He joined Chevron in 1980 as a financial analyst, and integrated Texaco with Chevron.
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James T. Hackett
$23.17m
Company: Anadarko
Title: CEO (in 2011)
Hackett was named Executive Chairman of the company in May 2012, after serving as Chief Executive Officer since 2003 and Chairman of the Board since 2006.
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Todd Kozel
$20.71m
Company: Gulf Keystone Petroleum
Title: Executive Chairman and CEO
Kozel is unapologetic about his pay package, which more than doubled over 2010, telling investors “I made $2 billion for my shareholders.”
Gulf Keystone lost $62.4m for 2011, while executives were awarded an incentives scheme in the event that the London-listed independent is sold. Kozel said this is in place “in case an unwanted transaction comes along.”
The firm is currently appraising its sizeable assets in Iraqi Kurdistan.
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John B. Hess
$18.19m
Company: Amerada Hess
Title: Chairman and Chief Executive Officer
Hess is a third-generation oil man, taking the reins from his father Leon in 1995. He has steered the company away from downstream activities to exploration and production.
The company went from booking a loss of $458.9 million in 1998 to a profit of $929 million 2011, up 73% on 2010.
High prices fended off the potential effects of a 5.7% production decline attributable to shutdowns in Libya.
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Bernard J. Duroc-Danner
$17.32m
Company: Weatherford International
Title: Chairman, President and CEO
Duroc-Danner was the highest-paid oilfield services CEO in 2011. He helped found EVI, Weatherford’s predecessor, and has been in charge ever since.
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David J. Lesar
$15.84m
Company: Halliburton
Title: Chairman, President and CEO
Lesar’s 2011 salary rose by a comparatively modest 6.3%, having risen 20% from 2009 to 2010. His decision to move to Dubai in 2007 reflects Halliburton’s shifting focus.
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G. Steven Farris
$15.64m
Company: Apache
Title: Chairman and CEO
Farris has been CEO since 2002 and chairman since 2009. Under Farris’s watch, Apache has become the largest acreage holder in Egypt’s Western Desert.
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Peter Voser
$14.35m
Company: Royal Dutch Shell
Title: Chief Executive Officer
Voser returned to Shell from ABB after the 2004 reserves crisis, and the Swiss is the first non-British or Dutch CEO of the company.
As head of Shell since 2009, Peter Voser, an economist by training, has presided over a stringent internal cost-cutting drive. “Shell had become too slow,” Voser explained to Forbes. “We’d built up a lot of structures, hierarchies, fat.” Voser made the top 14,000 staff at Shell reapply for their jobs, and shed 20% of the company’s management.
Voser has also continued Shell’s push into key gas markets, including massive GTL investment in Qatar and $30 billion in Australian LNG.
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David M. Wood
$13.75m
Company: Murphy Oil
Title: President and CEO (quit June 2012)
David Wood abruptly quit Murphy Oil on 20 June 2012, and is currently a consultant to the company. He was with the firm for 17 years, downsizing downstream operations and pushing into new exploration and production markets, including Iraq, Congo, Suriname, Indonesia and Brunei.
The company was hit by a $370m write-down last year after its three-well exploration campaign in the Congo came up dry.
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Paal Kibsgaard
$11.86m
Company: Schlumberger
Title: CEO
Paal Kibsgaard has had big shoes to fill, replacing industry legend Andrew Gould last year. Prior to his most recent position, Kibsgaard held a variety of global management positions including chief operating officer, vice president of Engineering, Manufacturing and Sustaining; vice president of Personnel for Schlumberger Limited; and president of Schlumberger Drilling & Measurements. He started his career with ExxonMobil. Schlumberger recently beat analyst forecasts with Q2 2012 profit of $1.4 billion.
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Charles D. Davidson
$11.49m
Company: Noble Energy
Title: Chairman and CEO
Davidson joined Noble Energy, which has oil and gas exploration interests in the East Mediterranean, in 2000 as chairman and CEO after serving at the top of Vastar Resources. A member of the original executive team that formed Vastar in 1994, he previously held a number of engineering, operations and executive positions at ARCO.
Active in numerous industry and trade organisations, Davidson is currently serving as chairman of the Independent Petroleum Association of America’s Offshore Committee.
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Chad C. Deaton
$11.24m
Company: Baker Hughes
Title: Principal Exec (in 2011)
Deaton is Executive Chairman of Baker Hughes after stepping down as CEO, a role he occupied since 2004. He joined Baker Hughes from Hanover Compressors, where he was CEO. Previously, Deaton spent more than 20 years in leadership roles with Schlumberger.
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Bob Dudley
$7.04m
Company: BP
Title: CEO
Former head of the tumultuous TNK-BP venture and now BP, Dudley has the highest profile of any oil executive. Joining BP via its acquisition of Amoco, he has managed BP’s post-Macondo divestments, and now has to find a replacement for TNK-BP’s dividend-boosting output.
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Paolo Scaroni
$6.37m
Company: Eni
Title: Chief Executive Officer
Unlike many of his peers, Paolo Scaroni is not a career-long oil man, having led UK glass firm Pilkington and French materials manufacturer Saint-Gobain. He also worked at management consultants McKinsey, and chaired Alliance Unichem (now Alliance Boots).
In 2011 Eni weathered a slump in Libyan oil and gas production, and made a landmark gas discovery off the coast of Mozambique, and is appraising opportunities in new markets, including Russia and Pakistan.
Scaroni has led Eni since 2005, guiding its share price from €18.42 at the end of 2004 to €39.86 at the end of 2011.
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Christophe de Margerie
$6.1m
Company: Total
Title: Chairman and CEO
Margerie began his career at Total straight out of university in 1974, joining the Executive Committee as the President of E&P in 1999.
He then became Senior Executive Vice President of Exploration & Production of the new TotalFinaElf group in 2000. In January 2002 he became President of E&P, and was made up to CEO in February 2007.
Margerie recently had to contend with a one-off tax sting on oil inventories in the French budget which could cost Total around $170 million, and is continuing negotiations with Gazprom over the Shtokman gas field, one of the largest in the world.
