The oil and gas industry stands for secure, good-paying jobs — at least for its top executives.
Regular workers in the sector, not so much.
In the wake of 2020’s Trump oil bailouts, a dozen big oil companies paid their CEOs more than 100 times their median worker’s pay while eliminating jobs, a BailoutWatch analysis of their public filings reveals. At half of these companies, the disparity between CEO and worker pay widened drastically.
These results are the latest evidence that the fossil fuel industry’s bailout billions did little to help everyday Americans. They come as debate intensifies around President Joe Biden’s proposal to end some subsidies and the industry’s denial that any subsidies exist. (In fact, the U.S. lavished $20 billion in annual subsidies on fossil fuels as of 2017; including indirect support, the number rises to $649 billion. That excludes the more than $15 billion in direct pandemic bailouts.)
Given the outsized benefits funneled to fossil fuel executives and shareholders during a crisis year, the results raise a fresh question: Who will benefit as the bailout-cushioned industry rides higher oil prices back to profitability?
Among the findings:
- A dozen companies where average workers received less than 1% of CEO pay eliminated a collective 35,480 jobs
- Nine of them received $4.8 billion in tax bailouts under a coronavirus relief law last year, an average of more than a half-billion dollars apiece. They are: Marathon Petroleum, Phillips 66, National Oilwell Varco, Occidental Petroleum Corp., Fluor Corp., Baker Hughes, Westlake Chemical Corp, Targa Resources Corp., and Centerpoint Energy.
- Spread among the laid-off employees from all 12 companies, these tax bailouts amount to $135,400 per worker — in line with the median salary that most companies reported
- The remaining three companies received the Federal Reserve’s implicit endorsement through its bond-buying, enabling them to issue $19.7 billion in new debt to investors. They are Chevron, ConocoPhillips, and Continental Resources
Continental Resources’ incoming CEO William Berry, for example, received compensation worth $29.2 million in 2020, including about $47,000 for personal use of a company plane and $176,000 in relocation expenses, the company said. Compared with the company’s median salary of $112,646, Berry received 260 times more. That’s up from a 100:1 in 2019 when his predecessor received $12.7 million.
Continental cut 59 workers from its payroll in 2020, about 5% of its workforce. If they all received its median salary, it would have cost Continental $6.6 million to keep them on the job.
The chasm between Berry’s salary and workers' wages widened, Continental said in its proxy filing, because of an initial stock grant that employees “typically receive” when they are hired. Berry’s 2020 stock awards totaled $27 million.
“The value of stock awarded to Mr. Berry in connection with his employment was consistent with the Company’s typical practice,” Continental explained in its proxy statement. Without it, his pay would have been only 100 times the median worker’s pay, it said.
At Continental and the five other companies where massive pay gaps widened, CEOs made an average of $18 million. The remaining companies are: Occidental Petroleum, Fluor Corp, Baker Hughes, CenterPoint Energy, ConocoPhillips.
Even where the pay ratio declined, the disparity remained staggering. Phillips 66, for example, paid CEO Greg Garland $25 million, including $176,000 to use a company aircraft for personal trips, $22,000 for “miscellaneous perquisites,” and $16,000 for financial counseling. His compensation package was 149 times bigger than the median worker’s pay — down from a multiplier of 169 in 2019, when he received $32 million.
Oil executives have defended the status quo — government support for an industry whose worst costs are borne by Black, Indigenous, Brown, and poor communities — mainly by denying that the subsidies exist.
“There seems to be a misconception out there…that somehow the oil and gas industry have benefits from some special sort of tax structure. We don’t,” Mark Murphy, President of Strata Production Company, testified at a House subcommittee hearing last month.
“You do benefit from special rules,” Rep. Katie Porter shot back, citing a tax subsidy allowing drillers to deduct 70% of their new wells’ costs immediately. If the industry believes in a tax code without fossil fuel subsidies, she said, “I would be happy to have Congress deliver.”
Porter, who chairs the House Natural Resources Subcommittee on Oversight and Investigations, will hold a hearing next Wednesday morning to examine the industry’s record on employment.
BailoutWatch reported previously that oil and gas companies used billions to pay off shareholders rankled by slumping share prices while laying off tens of thousands of workers. All the findings were based on fossil fuel companies’ public disclosures covering the pandemic year.
President Biden took early executive action to reduce government handouts to fossil fuels, but it will take congressional action to eliminate the biggest subsidies to help pay for a transition to clean energy sources. One such proposal, sponsored by Rep. Ilhan Omar and Sen. Bernie Sanders, is the proposed End Polluter Welfare Act.
The data table underlying this analysis is available here.