Friday, February 19, 2016

CEO Takes Home $18 Million After Cutting 25,000 Jobs

2015 was a rough year for oil and gasoline companies.  Overproduction has gasoline prices at historic lows and the bottom line has suffered across the world for many energy corporations, unless apparently you are the CEO of one of those companies.  Dutch oil giant Schlumberger, the first of the oil companies to report 2015 earnings and CEO compensation, paid its CEO Paal Kibsgaard $18.3 million in 2015, while it simultaneously cut 25,000 jobs and saw its revenues plummet 41%.

According to CNN/Money:  "CEO Paal Kibsgaard received total compensation worth $18.3 million in 2015, the company reported, down only slightly from $18.5 million the year before. The rest of Schlumberger didn't fare so well. The company cut 25,000 jobs during the year, or 20% of its workforce.  Revenue was down 27%, and profit plunged 41%. Schlumberger shares tumbled 18%. The weak results and layoffs are the result of the plunge in the price of oil."

Why?  If revenue, profit and share price tumble, why does CEO pay remain at extraordinary levels?

1 comment:

  1. It is a complete shock to think the CEO's pay only dropped 2% while 25,000 jobs were cut. The CEO's pay may have remained at an extraordinary level because the CEO had a contract with a fixed base salary, and the bonus was contingent on revenue, profit, and share price. Even if the CEO cut his salary by 10 million dollars, how many job could he have saved? Would the jobs saved be worth the pay decrease? I would like to think the CEO chose to keep his high paying salary and cut the 25,000 jobs because it was in the best interest of the Company. However, this may not be the case. If the Company can prove the CEO was acting for his personal interest, could there be a lawsuit to hold the CEO personally liable?

    Thanks- Kailey