Companies with headquarters or significant operations in Houston last year paid CEOs up to 935 times more than the median employee salary, according to analysis of company filings.
Before his departure in January, John Watson, Chevron’s now-retired CEO, collected a big pay check: $24.8 million. He also enjoyed perks of the C-suite: $27,000 in air travel, $19,000 in financial counselling and $6,500 for the use of a vehicle, among other corporate giveaways.
Chevron employees didn’t do too badly in 2017, either, but nowhere near as well as Watson. As he ended his eight-year tenure, he earned 180 times the median employee salary of $138,000.
Data released by US companies for the first time this year highlight the wide gaps between the pay of CEOs and middle-of-the road workers, a gap that has ballooned in recent decades as executive compensation packages have grown richer and workers’ earnings have largely stagnated. Over the past half-century, the average pay of an American CEO has climbed from 20 times greater than that of employees to 271 times, according to the Economic Policy Institute, a Washington think tank.
In the Houston area, companies with headquarters or significant operations there last year paid CEOs up to 935 times more than the median employee salary, according to analysis of company filings by the Houston Chronicle.
“CEO pay is growing at an exponential rate compared with stagnant wages for the workforce,” Rob DuBoff, director of corporate research at consultancy Just Capital, told the newspaper. “As companies are growing, what part of the success is translating to the workforce instead of just the C-Suite?”
Companies are worried that employees will read the median salaries and either get discouraged because they’re not making that much or leave for rivals that they see pay more.
The highest-paid chief executives in Houston earned $17 million on average last year, about 150 times more than the median employee pay, a Houston Chronicle analysis shows. The CEOs of those companies, which include Halliburton, Nabors Industries and National Oilwell Varco, took home anywhere from 108 to 935 times what they paid workers earning the median salary.
The highest median pay at these companies ranged from about $110,000 at Sugar Land’s CVR Energy to $193,000 at San Antonio’s Valero Energy. In between were Exxon Mobil, based in Irving, where the median pay topped $160,000; Houston’s Apache Corp., with a median salary of about $146,000, and Noble Energy, also of Houston, with median pay of more than $127,000.
Oilfield service companies such as Halliburton, which slashed its workforce by nearly 40 percent in the recent downturn, have been hiring back crews for hydraulic fracturing fleets and other operations in US shale fields like the Permian Basin.
But the industry’s workforce is climbing more slowly than oil prices and production, and labour shortages have quickly materialized. With US unemployment near historic lows, and the oil and gas industry increasingly going digital, production and services companies have found themselves competing for talent with technology companies and other industries.
Halliburton, for example, reported the median worker pay at $79,000, which badly lags Facebook, Netflix and Google’s parent company Alphabet. The median pay at these tech companies ranged from $183,000 to $240,000.
Houston’s oilfield service firms and oil-equipment makers tend to employ large workforces spread out across oil fields and manufacturing plants, and their employees typically are paid less than companies that extract oil and gas. Those companies tend to have larger CEO-to-employee pay gaps.
Halliburton CEO Jeff Miller earned $23.1 million last year, 290 times the median employee salary. Anthony Petrello, CEO of Houston drilling contractor Nabors Industries, collected $14.1 million and the median employee made about $52,000, a ratio of 268-to-1. Clay Williams, CEO of local oilfield equipment maker National Oilwell Varco, made $12.6 million, 239 times the $53,000 of its median employee.
Some pay gaps were staggering. At US oil refiner Marathon Petroleum, an Ohio company with two refineries and offices in Houston, CEO Gary Heminger made $19.7 million in 2017, compared with the median employee’s $21,034, a 935-to-1 ratio. By comparison, rival refiner Phillips 66, Houston’s biggest publicly traded company, reported CEO Greg Garland’s total compensation at $23.8 million and its median worker was paid $170,988, a 138-to-1 ratio.
Marathon Petroleum attributed the large gap to its retail stores, which employ some 32,000 people who tend to work fewer hours at lower pay than at its refineries. If retail workers are excluded, the ratio of CEO pay to median employee pay would shrink to 156:1, the company said.