In 2019, shale company CEOs took home $10.4 million on average. That same year, their companies lost more than $3 billion in free cash flow. Given the current crisis, some oil companies are setting up financial protection for executives.

Note: this post was updated to include recent compensation data.


Treasury Secretary Mnuchin has repeatedly stressed that the Trump administration’s aid to corporate America in response to the pandemic is not a bailout. Despite this, the Treasury is now poised to announce a plan to use taxpayer dollars to purchase the fracking industry’s corporate debt.

Over the past decade, frackers have lost more than $250 billion and laid off tens of thousands of employees, prompting Wall Street to cut off the money pipeline. At the same time, many CEOs have been rewarded handsomely thanks to generous compensation and severance packages.

Documented reviewed financial filings of leading shale oil companies, including CEO compensation, financial performance, and bankruptcy reorganization plans. The analysis reveals how the Trump administration’s efforts to delay the inevitable are nothing more than a lifeline for overpaid, failing CEOs.

Key findings include:

  • For companies that have filed a 14-A proxy, mid-sized shale oil CEOs made $10.4 million on average in 2019. During that same period, these firms lost more than $3 billion in cash flow.
  • Between 2014-2019 CEO pay rose 68% on average, while stock prices declined 58%.
  • The average CEO golden parachute heading into 2020 is $21 million. This payment could be triggered in the event of a sale, merger, liquidation, or other significant reorganization. Standout companies include Apache Resources ($30M), Cabot Oil and Gas ($36M), EOG Resources ($38.5M), Hess ($78M), and Noble Energy ($29M).
  • For the largest oil and gas E&P bankruptcies in recent years, CEOs took home a mix of retention bonuses and sizable equity ownership in the new company. Linn Energy CEO Mark Ellis topped the list, receiving a $6.9 million cash incentive payment and $58 million in equity compensation the year the company emerged from bankruptcy. For several CEOs, bankruptcy court-approved payments were significantly higher than any previous years’ compensation.

There are early signs that companies are setting up protections for CEOs in the wake of this current crisis.

  • In an after market close filing on May 8th, Chesapeake announced it would pre-pay $25 million of executive bonuses. Chesapeake is likely to file for Chapter 11 bankruptcy protection shortly.

CEO compensation increased even as companies failed to generate cash

CEO Compensation vs. Sale Price
CEO Compensation vs. Sale Price Kelly Mitchell

The shale industry was in a tailspin before the pandemic. Over the last 10 years the industry has not found a way to extract oil from shale at a low enough price to make a profit. However, bad business strategy has not stopped oil and gas CEOs from taking home tens of millions of dollars. In 2019, fracking CEOs averaged $10.4 million dollars in executive compensation. That same year, our representative sample of shale companies reported negative free cash flow in excess of $3.5 billion.

Between 2014 and 2019, many shale companies saw their share price decline by more than 90%. Over that same period, CEO compensation increased, in some cases more than 200%. Given persistent low or negative oil prices and a lack of access to capital markets, bailout money may be one of the few remaining sources for future CEO payouts.

Some highlights:

  • The Conference Board’s 2019 CEO Pay and Executive Practices report found that the average CEO compensation for Russell 3000 CEOs was $7 million. Several companies in our set were in the 90th+ percentile for CEO pay.
  • Chesapeake Energy is likely to file for Chapter 11 bankruptcy protection in the coming weeks. CEO Robert Douglas Lawler made $22.7 million in 2018. In 2019, his company reported negative free cash flows over $476 million. Over the past five years, Chesapeake’s share price declined by 97%.
  • Pioneer Natural Resources CEO Scott Sheffield, a frequent guest of cable news networks, took home $13 million last year, a 140% increase over 2014. During that same period, Pioneer’s share price declined 14%.

Severance packages and retention bonuses protect CEOs through financial distress

Shale Oil CEO Compensation
Shale Oil CEO Compensation Kelly Mitchell

Shale oil companies face an elevated risk of bankruptcy in the coming years; sales and mergers could also be on the horizon given depressed oil prices and pre-existing financial woes. In fact, a recent report from the Kansas City Fed found that 40 percent of oil and gas companies surveyed could face serious liquidity problems in the next year. These developments could ultimately trigger change of control payments or retention bonuses for top executives.

In the event of a merger, sale, liquidation, or reorganization, CEOs can be awarded a Change in Control severance package. For the companies in our set, the average board approved CIC package is $21 million.

Top executives are similarly rewarded by bankruptcy courts and corporate boards -- indeed, bankruptcy payouts are often larger than any previous or subsequent compensation package for CEOs.

A complete analysis of recent oil and gas bankruptcies and executive compensation can be found here.

Some highlights include:

  • Linn Energy filed for bankruptcy in 2016 with $6 billion in debt. CEO Mark Ellis received a $6.9M cash incentive payment the year Linn filed for bankruptcy, and then received $58M in stock awards the year following. The $6.9M award was agreed by the Predecessor’s Compensation Committee, approved by the bankruptcy court, and paid in quarterly cash installments.
  • Sandridge Energy filed for Chapter 11 in 2016 with $8.2 billion of debt on the books, the largest (by debt) E&P bankruptcy in recent years. CEO James Bennett took home an $8 million bonus that year, bringing his total compensation up to $18 million.

In the appendix below you’ll find a breakdown of CEO compensation, severance packages, and share performance by company.

CompanyCEO Compensation (2018)CEO Compensation (2019)Change of Control PackageCompensation Change 2014-2019Share Price Change 2014-2019
Antero Resources Corporation$9,143,022$5,852,902-79%-95%
Apache Corporation$15,201,447$14,287,300$30,467,593167%-70%
Cabot Oil & Gas Corporation$13,050,320$13,830,926$35,835,82641%-95%
Callon Petroleum Company$5,577,766$7,009,587$11,640,531379%-54%
Carrizo Oil & Gas Inc.$5,705,742-26%-23%
Chesapeake Energy Corporation$22,745,427$15,392,109$17,821,6985%-82%
Cimarex Energy Co.$9,727,480$9,002,555$25,820,6902%-97%
Concho Resources Inc.$13,317,156$12,958,451$15,898,94114%-48%
Continental Resources Inc.$13,332,412$12,746,088$17,784,72218%-15%
Devon Energy Corporation$12,459,068$13,795,899$42,027,00089%-36%
Diamondback Energy Inc.$10,549,163$16,049,655$30,743,386143%-58%
Encana Corp.$11,788,470$12,570,394$17,612,89969%82%
EOG Resources Inc.$12,042,335$12,738,856$38,584,44221%-70%
EQT Corporation$5,301,203$13,175,256230%2%
Gulfport Energy Corporation$5,500,16015%-88%
Hess Corporation$12,572,440$13,493,661$78,134,320-40%-95%
HighPoint Resources$4,411,736$4,870,568$6,536,83135%-18%
Laredo Petroleum Inc.$8,840,734$7,217,941$7,679,41617%-94%
Marathon Oil Corporation$12,210,874$14,050,851$40,344,78622%-89%
Matador Resources Company$7,359,320$8,028,309$6,205,313201%-61%
Noble Energy Inc.$11,213,168$13,038,313$28,946,313146%-64%
Northern Oil and Gas Inc.$3,076,426$2,031,700-46%-84%
Oasis Petroleum Inc.$7,258,700$8,212,209$11,165,98419%-93%
Parsley Energy Inc.$3,885,232$6,584,555$7,763,932384%-15%
PDC Energy Inc.$6,967,823$7,730,290$11,809,248200%-51%
Penn Virginia Corporation$867,985$882,720$2,963,608-58%
Pioneer Natural Resources Company$11,936,791$13,355,547$24,041,071138%-14%
QEP Resources Inc.$6,798,430$16,963,627$7,243,181114%-85%
Range Resources Corporation$8,711,188$8,384,520$10,192,518-21%-94%
SM Energy Company$6,953,524$5,999,46441%-86%
Southwestern Energy Company$8,420,470$10,277,819$18,206,08050%-94%
Whiting Petroleum Corporation$5,432,235$11,334,302$6,463,1006%-97%
WPX Energy Inc.$11,325,367$11,325,367$26,036,866-36%-31%
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