Exxon To Cut Trader Salaries In Favor Of Performance Bonuses And Long Term Incentives

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by Tyler Durden
Saturday, Mar 02, 2024 - 04:05 PM

Exxon Mobil Corp. is revising its compensation structure for traders, incorporating salary reductions in line with industry standards, complemented by potential cash bonuses and long-term incentives, according to a Thursday write-up by Bloomberg. 

It marks yet another savvy move for the 'more cash than god' oil firm that continues to find additional efficiency for shareholders.

This adjustment, which has been communicated to traders both in the US and Europe, aims to enhance competitiveness by aligning closer with practices at peer companies, which favor substantial bonuses linked to performance over higher base salaries.

Overall, the move marks part of a broader strategy to revamp Exxon's trading operations, with the company seeking to emulate the success of competitors and specialized trading firms through a focus on asset-backed trading to mitigate risk.

The company has signaled that trading profits will now influence bonus eligibility, marking a shift towards rewarding performance that contributes directly to Exxon's financial outcomes.

“The company plans to offer competitive salaries informed by benchmarking,” Exxon told Bloomberg. The company added that bonuses and incentives would be based on “company results, global trading results and individual performance."

This isn't the only place Exxon could be looking to eek out additional cash. Recall earlier this week we posted that the oil supermajor could be looking for a 'pound of flesh' from the forthcoming proposed takeover of Hess by Chevron. 

Exxon is challenging Chevron's acquisition of Hess by challenging the terms of a stake in a major Guyana oil field. Exxon said it could exercise pre-emptive rights that could block Chevron from acquiring a 30% stake in the field, which sits at the center of the potential Hess acquisition. 

MKP Advisors said in a note reviewed by Reuters that Exxon is "very possibly looking to extract a pound of flesh from Chevron to support the deal proceeding." They speculated that "It is very possible they want greater commitments from Chevron than Hess has previously signed up to."

Exxon could be targeting Chevron to make concessions elsewhere, or to raise commitments already in place for the Guyana project. And it may be easier for Chevron to make concessions than to fight proceedings in court. 

Stewart Glickman, energy equity analyst at CFRA Research, told Reuters: "It's impossible to say if Chevron's lawyers or Exxon's lawyers are correct."

We noted earlier this week that ExxonMobil and China National Offshore Oil Corporation are "asserting their right to pre-empt its purchase of a stake in a Guyana oil project that is central to the deal."