Apache Shareholders Don't Approve Executive Compensation

Apache Corp. shareholders didn't approve the energy company's executive compensation plan for 2012 at its annual meeting Thursday, making their displeasure with the company's performance known.

Fewer than half of the voting shareholders, 49.8%, voted for the compensation plan for named executives. The vote Thursday is advisory and the board has no legal obligation to make changes to the 2012 pay package.

Apache spokesman John Roper said the company sees the vote as a comment on share performance. Apache shares are down 7.3% from a year ago. Shares fell 1.2% to $80.89 Thursday.

"We want to see our performance improve as well and to do so we need to hit 3% to 5% percent growth and execute our plan. We believe we have the right plan in place to do that," Mr. Roper said.

Apache has said it plans to sell $4 billion in assets this year to focus on North American onshore production, which it thinks will provide the best return, and to rid itself of land that hasn't been as profitable as it hoped. It will use the proceeds to pay down debt and buy back shares.

Chief Executive Steven Farris said during the meeting that he believes the company's share price has lagged because it has fallen short of production expectations and because of anxiety over its position in Egypt.

"We've got a great company, we do a great job, but in the last four or five quarters, we haven't done what we said we were going to do," he said. "We have missed estimates, and we cannot make commitments to shareholders we don't meet."

Praveen Kumar, executive director of UH Global Energy Management Institute at the University of Houston's C.T. Bauer College of Business, said the board doesn't have to do anything in response to Thursday's vote, but it might want to, as such a vote can indicate that shareholders are united in their dissatisfaction. Last year over 95% of shareholders voted to approve the company's executive compensation for 2011.

"It is probably a kid of firing across the bow, indicating to the board that there is shareholder resistance," Mr. Kumar said.

Also at Thursday's meeting, shareholders elected three directors to Apache's board.

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Chevron's Board to Cut Compensation for Executives Due to Safety Issues

Chevron Corp.'s board is cutting compensation for its chief executive and other top executives in the wake of a string of accidents and other operational problems since late 2011, according to people familiar with the matter.

Chevron's board on Wednesday trimmed equity awards by 11% and bonuses by at least 10% for Chairman and CEO John S. Watson and several other executives, one of the people said.

"When things go poorly, the pay should reflect it," this person said. The directors "absolutely want to deliver a message to management."

Chevron has been performing well financially. But in February, the company disclosed it reduced the number of stock-options and performance shares awarded to Mr. Watson from last year, without revealing the bonus cuts or explaining the cause of the reductions. Mr. Watson's 2012 compensation package was valued at $24.7 million, about half of which came from equity grants awarded the previous year.

The same equity awards, which are tied to how Chevron's stock performs, were reduced for four other top executives, according to filings with the U.S. Securities and Exchange Commission.

Lloyd Avram, a spokesman for the company, said the board was still meeting.

"The company does not have a comment to provide until such time as the board meeting has concluded," he said.

Unlike other oil companies criticized in recent years for lavishly rewarding top brass, Chevron's executive pay practices have not prompted controversy among shareholders. An advisory vote on its compensation for 2012 was supported by 95% of votes cast at Chevron's annual meeting last year.

The San Ramon, Calif.-based energy giant has been leading its peers in profit and stock performance; shares are up 12% this year, outperforming larger rival Exxon Mobil Corp., and its $233 billion stock-market value recently topped that of Royal Dutch Shell PLC.

But Chevron has also suffered a string of operational setbacks since late 2011. Oil leaks from the seafloor at its Frade field off the Brazilian coast in November 2011 and March 2012 led the company to halt production there, forfeiting daily production of 29,000 barrels of oil and its equivalent in natural gas. The field has yet to restart and Chevron is still fighting the resulting legal quagmire.

In January 2012, a drilling rig in Nigeria operated by a Chevron subsidiary exploded, resulting in two deaths. And in August 2012, a huge fire broke out at its Richmond refinery after a badly corroded pipe ruptured. A state agency said in January it would seek fines totaling nearly $1 million for the incident.

Safety has become critical for oil companies operating under increasingly tough regulatory scrutiny, a concern heightened by the 2010 BP PLC Gulf of Mexico oil spill.

Mr. Watson earlier this month touted Chevron's safety performance to analysts in New York, saying that its 250,000 employees had a total of 70 injuries that required them to miss a day of work last year.

"That's not just the best in the industry, it's world-class performance," he said, adding that the company still had room to improve.

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Chevron's Board to Cut Compensation for Executives Due to Safety Issues

Chevron Corp.'s board is cutting compensation for its chief executive and other top executives in the wake of a string of accidents and other operational problems since late 2011, according to people familiar with the matter.

Chevron's board on Wednesday trimmed equity awards by 11% and bonuses by at least 10% for Chairman and CEO John S. Watson and several other executives, one of the people said.

"When things go poorly, the pay should reflect it," this person said. The directors "absolutely want to deliver a message to management."

Chevron has been performing well financially. But in February, the company disclosed it reduced the number of stock-options and performance shares awarded to Mr. Watson from last year, without revealing the bonus cuts or explaining the cause of the reductions. Mr. Watson's 2012 compensation package was valued at $24.7 million, about half of which came from equity grants awarded the previous year.

The same equity awards, which are tied to how Chevron's stock performs, were reduced for four other top executives, according to filings with the U.S. Securities and Exchange Commission.

Lloyd Avram, a spokesman for the company, said the board was still meeting.

"The company does not have a comment to provide until such time as the board meeting has concluded," he said.

Unlike other oil companies criticized in recent years for lavishly rewarding top brass, Chevron's executive pay practices have not prompted controversy among shareholders. An advisory vote on its compensation for 2012 was supported by 95% of votes cast at Chevron's annual meeting last year.

The San Ramon, Calif.-based energy giant has been leading its peers in profit and stock performance; shares are up 12% this year, outperforming larger rival Exxon Mobil Corp., and its $233 billion stock-market value recently topped that of Royal Dutch Shell PLC.

But Chevron has also suffered a string of operational setbacks since late 2011. Oil leaks from the seafloor at its Frade field off the Brazilian coast in November 2011 and March 2012 led the company to halt production there, forfeiting daily production of 29,000 barrels of oil and its equivalent in natural gas. The field has yet to restart and Chevron is still fighting the resulting legal quagmire.

In January 2012, a drilling rig in Nigeria operated by a Chevron subsidiary exploded, resulting in two deaths. And in August 2012, a huge fire broke out at its Richmond refinery after a badly corroded pipe ruptured. A state agency said in January it would seek fines totaling nearly $1 million for the incident.

Safety has become critical for oil companies operating under increasingly tough regulatory scrutiny, a concern heightened by the 2010 BP PLC Gulf of Mexico oil spill.

Mr. Watson earlier this month touted Chevron's safety performance to analysts in New York, saying that its 250,000 employees had a total of 70 injuries that required them to miss a day of work last year.

"That's not just the best in the industry, it's world-class performance," he said, adding that the company still had room to improve.

Copyright (c) 2012 Dow Jones & Company, Inc.

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

View the original article here