Energy sector's COVID recovery turns into massive CEO payday

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The CEOs of America’s biggest oil companies were paid a lot more in the first year of the COVID crisis than initially estimated, thanks to stock-heavy compensation packages that have since soared in value, according to an examination of pay disclosures over three years.

the loss of one in six jobs

Public pensions and popular index mutual funds have endured lagging performance in the U.S. energy sector for a decade. The S&P 500 Energy Sector Index’s total return has been 38% since May 2013, far behind the broader S&P 500’s total return of 206%. That’s because about 90% of energy companies measure stock performance against others in the same industry who tend to suffer at similar times. They use a metric called relative total shareholder return and benchmark it against a pre-determined group of peer companies - making it possible for executives to get big payouts even if their companies’ stocks lose value.

Paying dividends on unvested stock grants is opposed by top proxy adviser Institutional Shareholder Services. Many large companies, including Coca-Cola and Microsoft, have disavowed the practice. Marathon Petroleum’s Michael Hennigan received $9.6 million in stock-based pay, most of it granted on March 17, 2020, the day he became CEO. The grant coincided with one of the lowest closing stock prices in the company’s history as a publicly traded company, according to Refinitiv data.

 

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