EXXONMOBIL plans to cut some traders’ salaries as part of a pay overhaul that will include cash performance bonuses at the end of the year, as well as long-term incentives.
The company informed traders in the United States and Europe this month that base salaries would be cut to better align with industry norms, according to sources familiar with the matter who asked not to be identified discussing internal business. In some cases, the cuts could be offset by higher bonuses, said the sources.
The shift comes as the Texas oil giant overhauls its trading business to better compete with the likes of BP and Shell, which have reaped bumper profits from their commodities desks in recent years. With the latest changes, ExxonMobil’s pay model is moving closer to that employed by the broader industry, which typically pays traders large bonuses tied to profit, and lower base salaries.
“The company plans to offer competitive salaries informed by benchmarking,” ExxonMobil said. Bonuses and long-term incentives will depend on “company results, global trading results and individual performance”.
ExxonMobil created a new trading division last year to bring all its traders into one business unit and expand its scope. While the company wants a slice of the profits enjoyed by merchant traders such as Trafigura Group and Vitol Group, ExxonMobil’s new division is focused on asset-backed trading, which is less risky. Chief executive officer Darren Woods said in April that the company will not prioritise “speculative positions”.
In an early sign the strategy is paying off, the company posted a US$1.14 billion gain from trading in the fourth quarter.
Still, ExxonMobil announced in December that traders who do take on risk to boost company profits would, for the first time, be eligible for cash performance bonuses.
Under the new compensation structure shared internally this month, those bonuses are the only way to offset salary cuts for some traders, said the sources.
The new pay package will apply to “trading roles that clear authority to trade, set trading strategies, or use financial derivatives”, ExxonMobil said. BLOOMBERG
