Here’s a switch. XTO Energy, the Fort Worth oil and gas company, promoted two executives last week and cut their pay potential for next year. It also eliminated the chairman’s bonus.
Bob Simpson, the chairman, explained to the Star-Telegram that XTO previously paid officers in “an entrepreneurial fashion,” linking bonuses to increases in the company’s stock price.
That led to some spectacular results. In 2007, for example, Simpson’s bonus accounted for $35.5 million of a $56.6 million total pay package. The other two top executives, Keith Hutton and Vaughn Vennerberg, earned $20.7 million and $19.7 million, respectively, in the same league as Exxon Mobil Chairman Rex Tillerson, who received $21.7 million.
Exxon dwarfs XTO in size.
“We chose to address that now, to make it less controversial,” Simpson told the Star-Telegram, referring to XTO’s entrepreneurial pay plan.
On Dec. 1, Simpson, who remains chairman, is relinquishing his CEO title to Hutton, who was president. Vennerberg becomes president.
Going forward, Simpson will receive an annual salary of $3.6 million, but no bonus. Total salary and bonus for Hutton and Vennerberg are capped at $12.5 million and $7.5 million, respectively, according to a company filing with the SEC.