Oil Company CEO Pay Averaged $32.7 Mln, Study Says (Update1)

By Vineeta Anand

Aug. 30 (Bloomberg) -- Rising prices and profits translated into pay packages for oil company chief executive officers that are nearly three times the size of similarly sized businesses, a new study from two research groups said.

In 2005, the CEOs of the largest 15 oil companies averaged $32.7 million in compensation, compared with $11.6 million for all large U.S. firms, according to the study, released today by the Institute for Policy Studies and United for a Fair Economy.

Amid reports of multimillion-dollar pay packages, shareholder activists have sponsored resolutions to limit compensation at companies like Exxon Mobil Corp. and Home Depot Inc. In May, three members of the House of Representatives criticized the retirement benefits of former Exxon CEO Lee Raymond and asked the company to fill a gap in its workers' pension fund.

``Instead of lining the pockets of executives, they should be investing the money into new sources of energy that go beyond fossil oils,'' said Sarah Anderson, director of the global economy project at the Washington-based Institute for Policy Studies, and a co-author of the study.

Anderson's group is a 43-year-old liberal non-profit that researches peace, justice and environmental issues. The group advocates the transfer of military resources to civilian use and opposes the ``corporate-driven'' approach to the globalization of the world economy.

United for a Fair Economy, a non-profit group based in Boston, wants to raise awareness about the effects of ``concentrated wealth and power,'' according to its web site. The group lists the American Federation of State, County and Municipal Employees and the Service Employees International Union among dozens of ``major collaborators.''

Combined $512.9 Million

Last year, the top executives at the 15 largest oil companies earned a total of $512.9 million, the study said. That figure includes the $95.1 million awarded last year to William Greehey, chief executive officer of Valero Energy Corp., the largest U.S. refiner, took home, including salary, bonuses, restricted stock and exercised stock options. Raymond, who retired in January as chief executive officer of Exxon Mobil, the most profitable U.S. company, collected $69.7 million.

Oil executives help manage the bottom lines as well as directing investments in oil and gas as well as fossil fuels, said John Felmy, chief economist at the American Petroleum Institute in Washington.

``They are paying dividends, buying back stock, and managing their businesses well,'' Felmy said. ``Their CEOs should be fairly compensated.''

The groups also examined the pay of defense contractors' chief executives. The top executives at defense contractors and military suppliers have benefited from the boom in government spending since Sept. 11, 2001, and the war in Iraq.

As a group, the CEOs of the 34 defense contractors have received total compensation of just under $1 billion since 2002. The highest-paid executive in the group was George David, the chairman and CEO of United Technologies Corp., the maker of Pratt & Whitney jet engines and the Sikorsky helicopters. David received $31.9 million last year, the study said.

To contact the reporter on this story: Vineeta Anand in Washington at vanand1@bloomberg.net .

Last Updated: August 30, 2006 11:29 EDT

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