Halliburton Investors Pan CEO Pay a Year After Dividend Cut (1)

Halliburton Co. investors rejected the pay packages for top executives in the latest rebuke of oil-industry management teams seen as insufficiently focused on shareholder returns.

Although the vote is advisory only, it represents an embarrassment for the oil-services giant that’s seen its market value crater amid pandemic-driven lockdowns that quashed energy demand around the world.

Investors have been ratcheting up pressure on oil executives and their boards to funnel more cash into dividends and share buybacks, rather than spending on long-term expansion projects. Until now, Halliburton and its brethren in the subsector that drills and fracks wells on behalf of major explorers had escaped censure.

Halliburton hasn’t raised its dividend since slashing it by 75% a year ago. More than 344 million shares were cast against the compensation plan, compared to roughly 297 million for it, the company said Friday in a filing. Last year’s compensation plan received 91% support last year.

“The Halliburton Board of Directors is disappointed by the shareholder advisory vote on the Company’s executive compensation program,” Chief Executive Officer Jeff Miller said in a press release. “In an industry challenged by COVID and oil supply and demand imbalance, Halliburton led its peers in total shareholder return performance, and has structured pay to attract, motivate, and retain employees.”

Halliburton and peers such as Schlumberger and Baker Hughes Co. are attempting to pivot to overseas markets and away from North American shale that’s still trying to claw its way out of last year’s historic price collapse.

Miller, who became CEO almost four years ago, received $22.3 million in compensation in 2020, including $5 million earned during 2018 that was reported during the year, according to the company’s proxy statement. He earned $12.8 million in 2019.

He had his base salary restored at the start of this year after the company slashed it by 20% in May of 2020 as the global oil industry was in the midst of history’s worst crude crash.

In 2018, he had agreed to a new employment agreement that imposed a four-year non-compete clause in return for $6.8 million. Halliburton said at the time the lengthier tie-up was necessary to fend off competitors who have “aggressively” courted its top talent.

The next year the oilfield contractor altered its executive compensation plan after investors expressed concern about items such as some awards being paid in cash, according to its proxy filed in 2020. Shareholders also wanted to see more of an emphasis on free cash flow, according to the filing.

The Houston-based company’s market capitalization tumbled from about $50 billion in early 2018 to as little as $4 billion last year before partially recovering to about $20 billion now.

(Updates with vote total in fourth paragraph.)

To contact the reporters on this story:
Dan Murtaugh in Singapore at dmurtaugh@bloomberg.net;
David Wethe in Houston at dwethe@bloomberg.net

To contact the editors responsible for this story:
Simon Casey at scasey4@bloomberg.net

Joe Carroll

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