Apache Corp., the third-worst performer this year among peer oil and natural gas producers, said target compensation for its chief executive officer was cut by 18 percent compared with reported 2012 compensation.
The target bonus for Chief Executive Officer Steve Farris was reduced to 150 percent of base salary from 200 percent, the Houston-based company said in a regulatory filing today. The CEO’s 2013 target equity grant dropped by 29 percent from the 2012 target, and Apache also lowered pay for directors.
Apache’s announcement comes a day after the company’s annual meeting, where shareholders failed to pass an advisory vote on compensation of named executive officers. Farris, who also is chairman, received $17.1 million in compensation in 2012, a 7.1 percent increase from a year earlier, according to the company’s proxy filing. That came as Apache’s stock dropped 13 percent during 2012.
“There’s certainly a number of people that have felt that they had some pretty bloated compensation there for not very good performance,” Leo Mariani, an analyst at RBC Capital Markets in Austin, Texas, said in a phone interview today.
Mariani, who has a sector perform rating on Apache shares and owns none, called today’s announcement a “step in the right direction.” On May 9, the company said it plans to sell $4 billion of assets this year and announced a program to buy back as many as 30 million shares. That followed a $16 billion acquisition spree in 2010 through 2012.
Apache’s total director compensation is being reduced to $300,000 from $350,000, with a cut in the equity component of the pay package. The company also said it’s putting in a mandatory retirement age of 75 years for all future directors first elected at or after the 2013 annual meeting, according to the filing today.
Apache said its board adopted a set of human rights principles, while also giving shareholders the right to call a special meeting with 15 percent of shares that meet certain conditions.
The company is the third-worst performer in 2013 on the Standard & Poor’s 500 Oil & Gas Exploration & Production Index, beating only Newfield Exploration Co. and QEP Resources Inc.