Paal Kibsgaard, 52, the Chairman and CEO of Schlumberger, is stepping down effective August 1, 2019. He joined the company in 2007 and has spent 8 years as CEO and 4 years at the Chairman of the Board.
Schlumberger has a market cap of $54 billion and has executive offices in Paris, Houston, London and The Hague. Its Houston offices are near the Galleria.
New CEO and Chairman
Replacing Mr Kibsgaard as CEO is Olivier Le Peuch. He joined the company in 1987 and has served as COO since February 2019. Mr Le Peuch will receive a base salary of $1.4 million. He will also receive a performance share unit grant worth $10.5 million that will vest over 3 years. The amount vested will depend on total shareholder return and free cash flow generation.
Current director, Mark Papa, is appointed non-Exec Chairman of the Board. He is a well-respected, seasoned E&P executive and a former CEO of EOG. He joined the board in October 2018.
On the earnings call held after the issue of second quarter results, Mr Kibsgaard said that he asked the Board to start the succession process in July 2018.
CFO to depart?
Also on the earnings call, an analyst asked about the future of Simon Ayat, CFO since 2007. (There was a report published in Reuters in July 2018 that Mr Ayat, now 64, intended to retire by the end of 2018). Mr Kibsgaard responded that the date for any retirement would be decided by new CEO, CFO and the Board.
Unusually among public companies, Schlumberger doesn’t have employment contracts with its executives and payments to departing executives are made on a case-by-case basis.
Mr Kibsgaard will enter into a three-year consulting agreement that pays him his annual base salary of $2 million. He will also receive a cash incentive award for 2019 to be paid in early 2020. (By comparison, the cash bonus for 2018 that he received was $1.1 million). His restricted stock units will continue to vest.
The market cap of Schlumberger is about half what it was when Mr Kibsgaard took over. Depressing as that may be, it has performed better than the oilfield services sector as a whole. The Philadelphia Oil Service Sector index is down by about 66% in the same time period.