Weatherford, a struggling oilfield services company, has announced changes to its cash bonus scheme for 2019 for senior executives and directors.
As a result, CEO Mark McCollum will be receiving a retention bonus of $2 million, and CEO Christoph Bausch will get $1.3 million. Three other members of the executive team will get bonuses of between $637,500 and $1.4 million each. The retention bonuses will be paid within 30 days.
The executives will also be eligible for quarterly cash bonuses. The target annual bonus for McCollum is $7 million, Bausch $1.65 million and the other executives between $231,000 and $2.3 million. Bonuses will be paid on achievement of certain quarterly and cumulative performance goals. If the executives achieve their stretch targets, they will get double.
The company said that it made the changes in response to the low share price, which has been below $1 since mid-November. This has meant the restricted stock units previously awarded have little value when they vested. The company argues this is not much of a retention tool for senior executives.
The company hasn’t yet disclosed what bonuses were earned for 2018. I presume they were zero or relatively small, otherwise the company wouldn’t have changed the scheme.
The directors also decided that, for 2019 and 2020, they will receive all their compensation in cash and will no longer receive equity as compensation for their service. For 2016 & 2017, the directors on average received about $150,000 in cash and $185,000 in stock awards annually. That $185,000 will now also be paid in cash.
Mark McCollum joined Weatherford as its CEO in March 2017. He was previously the CFO at Halliburton. You can read about his compensation package here.
The company has posted remarkably consistent financial results the past few years. For 2018, the company made an operating loss of $2.1 billion on revenues of $5.7 billion. For 2016 and 2017, the company made operating losses of $2.2 billion on revenues of $5.7 billion. Net cash used in operating activities has been $934 million for the three years combined.