- Cheniere Energy's Souki has a $147.8 million golden parachute
- Industry giants such as Exxon on the hunt for smaller firms
Apache Corp. and Anadarko Petroleum Corp., two exploration businesses that may find themselves as targets in an industry consolidation, are run by chief executives with smaller golden parachutes than similar-sized oil and gas companies.
The dollar incentive for takeovers for Apache CEO John Christmann was $8.4 million as of the company’s fiscal year-end when he was chief operating officer, and Anadarko CEO Al Walker’s was $31.2 million as of the end of 2014, regulatory filings show. By comparison, Charif Souki, the CEO of natural gas exporter Cheniere Energy Inc., has a payout of $147.8 million, the highest of 83 U.S. oil and gas companies with a market value less than $45 billion as of their fiscal year-end.
Industry giants such as Royal Dutch Shell Plc and Exxon Mobil Corp. -- among a group of oil producers that has a half-trillion dollars in cash and shares to fund takeovers -- are bargain hunting for smaller firms battered by the commodity’s slump. U.S. oil prices are down 45 percent in the past year, the worst 12-month slide since 1986, according to data compiled by Bloomberg.
Anadarko, based in The Woodlands, Texas, and the third-largest U.S. natural gas producer, said it withdrew an all-stock offer for Apache after the Houston-based company refused to engage in substantive talks. The move has put both businesses into play as targets, John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund, said in an interview last week. By making the unsuccessful bid public, Anadarko may be trying to increase pressure on Apache’s board to consider a sale.
Among those companies with the smallest golden parachute for its CEO is SM Energy Co. The payout for Javan Ottoson would be $1.26 million as of Dec. 31, 2014, when he was chief operating officer, according to its proxy filing.
“Particularly in view of the propensity for mergers, acquisitions and consolidations in our industry, we believe that these change of control executive severance agreements promote stability and continuity among our executives,” Denver-based SM Energy wrote in its proxy filed in April. The payment would allow executives “to remain neutral in the face of a transaction that would benefit our stockholders, but would result in their involuntary termination,” the company wrote.
Activist investor Carl Icahn has built a 13 percent stake in Cheniere, according to a November regulatory filing. He’s previously forced the sale of companies that he owns.
Spokesmen for Anadarko, Apache and Cheniere declined to comment beyond the filings.
CEO’s typically receive a golden parachute if they’re terminated without cause, or resign after a demotion following a takeover. The average payout among the 83 oil and gas companies averages 0.6 percent of the company’s market capitalization, according the data compiled by Bloomberg. The average golden parachute payment was $13.8 million, and the median was $8.4 million.
The biggest parachute relative to company size is the $36.2 million that would be due to John Schiller Jr., the CEO of Energy XXI Ltd. His award was equal to about 15 percent of the company’s $249 million market capitalization at its June 30 fiscal year-end. The Houston-based business’ stock has tumbled 74 percent in the past year and its bonds are trading for about 15 cents on the dollar. Greg Smith, a spokesman for Energy XXI, didn’t respond to calls seeking comment.