Energy Insights

Setting Annual Incentive Targets When Commodity Price Drops

One of the hardest challenges for a Compensation Committee is to set annual incentive performance targets at levels that are lower than the prior year’s actual performance.

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One of the hardest challenges for a Compensation Committee is to set annual incentive performance targets at levels that are lower than the prior year’s actual performance. It is difficult to explain to shareholders when share price is dropping, how…

Commodity Price Impact on Evaluating Performance

How to Manage Pay for Performance Measures in a Volatile Commodity Market

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Commodity prices can have a significant effect on share price and also on financial performance measures used by energy companies. This makes paying for performance at energy companies challenging because commodity price volatility can create misalignment between management efforts, management…

Under the Microscope

8 Keys to Benchmarking Pay to Withstand Stakeholder Scrutiny

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Say on Pay, ISS and activist investors have increased their focus on how companies benchmark pay and have raised the question whether benchmarking is used to inflate executive pay. This is particularly important in the energy sectors where pay levels…

Exercise of Discretion in Incentive Plans: Good, Bad or Ugly

The Question of How to Appropriately Exercise Discretion is Becoming More and More Difficult for Firms

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As shareholders and proxy advisors increase their focus on pay for performance, the questions of whether and how to exercise discretion in compensation programs have become more important and much more difficult to answer. For energy companies in particular the…

Assessing Long-Term Performance

Combining Absolute and Relative Measures in the Energy Industry

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Measuring long-term performance for companies in the energy industry is challenging because macro-economic factors, such as commodity prices, and company specific factors, such as particular asset portfolios, make it difficult to assess performance. A mix of absolute and relative measures…