Study Finds Poorly Designed Incentives in a Long-Term Business Cycle Industry

Study Finds Poorly Designed Incentives in a Long-Term Business Cycle Industry

Executive compensation in the oil industry often leads to excessive rewards for below-average performance, according to a survey released today by The Corporate Library. The study found that too little attention is paid to linking properly designed long-term incentives to a long-term business cycle. Most compensation plans are tied to single measures, such as EPS, with little or no peer comparisons, resulting in outsized pay awards. The 38-page study covers 18 U.S. oil companies and two companies based in the U.K.

Alexandra Higgins, The Corporate Library’s senior compensation analyst and the author of the study, commented: “Annual bonuses are generally too high throughout the companies, implying that compensation committees are providing too much focus on short-term results in a very long-term focused industry.”

The study also looks in detail at the pay performance link, compensation philosophy, ownership requirements, employment agreements, severance arrangements, and pensions.

The 20 companies covered are:

Anadarko Petroleum Corporation EOG Resources, Inc. Apache Corporation ExxonMobil Corporation Ashland Inc. Hess Corporation BP plc Marathon Oil Corporation Chesapeake Energy Corporation Murphy Oil Corporation Chevron Corporation Occidental Petroleum Corporation ConocoPhillips Royal Dutch Shell plc CONSOL Energy Inc. Sunoco, Inc. Devon Energy Corporation Valero Energy Corporation

Dynegy Inc. XTO Energy Inc.

The full report is available from The Corporate Library’s online store at

About The Corporate Library

The Corporate Library, headquartered in Portland, Maine, is the leading independent resource for corporate governance and compensation information and analysis of public U.S. corporations. Founded in 1999, it continues to be the authority on corporate governance matters, as evidenced by the frequency with which key media, business and government leaders seek its unique insight and objective perspectives. Additional information on The Corporate Library and its suite of online corporate governance data and analysis products can be found on its website at, or by visiting


Contact: Drew Buckley Media Relations The Corporate Library Email Contact

207 874-6921

Source: The Corporate Library

Share this post