Forget Tech, Big Oil is Doling Out America's Fattest Paychecks

Tweet

Move over Wall Street titans and Silicon Valley giants. When it comes to paychecks, Big Oil now looks like the best bet for U.S. workers.

(Bloomberg) -- Move over Wall Street titans and Silicon Valley giants. When it comes to paychecks, Big Oil now looks like the best bet for U.S. workers.

Spurred partly by the shale boom, energy companies paid their median workers $123,000 last year, according to data newly mandated by the U.S. That topped all sectors, including utilities, tech and health care. While energy’s chief executives made an eye-popping 120 times more, the gap with their employees was still the second-smallest among all industries.

What’s fueling this paycheck potency? First, a reliance on geologists, petroleum engineers and other highly skilled, well compensated professionals. Add to that the efforts needed to retain expertise -- and lure young talent -- after the recent oil price rout led to hundreds of thousands of job losses.

“They had to retain critical employees at almost any cost,” said Bill Arnold, a former Royal Dutch Shell Plc executive who now teaches energy management at Houston’s Rice University. “Companies had little managerial flexibility.”

Here’s a breakdown of pay by sector:

Businesses across the country are dealing with labor shortages, and in the red-hot Permian shale basin in Texas and New Mexico, “you see it even more dramatically," said Bob Sullivan of AlixPartners, a New York-based consultant to energy companies. “At some point, the wage pressure starts to get pretty high."

Oil and gas companies are essentially paying out now for two epic hiring slumps that followed price crashes in the the mid-1980s, and again in the middle of this decade. They’ve forced the business to play catchup, even as crude prices recover and drilling surges to new records.

The 2010 Dodd-Frank financial reforms required public companies to disclose their CEO-to-worker pay ratio starting this year. The figure is calculated by dividing a CEO’s compensation package by the pay of the median employee, one who makes more than half of the company’s workers and less than the other half. For Bloomberg’s complete database of CEO pay-rations, click here.

The Energy Pecking Order:

Within energy, a pecking order was clear: Producers and refiners staffed with highly trained, highly credentialed scientists, engineers and other professions had the most generous median pay. Offshore oil explorer Kosmos Energy Ltd. led the pack at more than $230,000. Refiner Valero Energy Corp., was second highest and Cheniere Energy Inc., the liquefied natural gas exporter, was third.

Oilfield service companies that employ worker bees of the shale field -- the roughnecks, mechanics, truck drivers and other blue-collar staff -- dominated the bottom.

Here’s the top and bottom 10 in energy among Russell 1000 companies:

Bridging the Gap:

Energy’s widest boss-to-employee gap was at Marathon Petroleum Corp., the fuel refiner and marketer, where CEO Gary Heminger’s $19.7 million pay package was 935 times the median. The company said that figure was skewed by the 32,000 employees, many of them part-timers, at its Speedway chain of service stations. Excluding them, the ratio would fall to 156-to-1, according to Marathon’s proxy statement.

Here’s the list of top and bottom pay ratios:

The Bosses’ Paychecks:

Comparing ratios among companies is an inexact science, at best.

Tweet

Emails: Separate multiple email addresses with semi-colon Your Email: Send email to me as well Subject: Comments: 200 character limit. 

 

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.