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Compensation Advisory Partners (CAP) has summarized cash compensation reductions taken in response to the COVID-19 pandemic by oil & gas companies across multiple sectors.
Key takeaways of COVID-19 actions in the oil and gas industry include:
- About 25% of the companies reviewed have disclosed downward adjustments to annual incentive targets. Oilfield services & drilling companies are the most likely to have announced that they have cancelled the 2020 bonus program altogether.
- Similar to the broader market, most companies seem to have elected to let their pre-established metrics and actual performance levels produce a natural reduction in bonus payouts for 2020.
- Some companies are still considering the use of discretion and/or whether or not it would be appropriate to adjust performance measures at this point in the year.
We will continue to monitor corporate public announcements and it will be interesting to see if some of these reductions become permanent in an effort to “right size” compensation.