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Marathon, oilfield service giants report largest pay ratios in oil, gas for 2018

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Marathon, oilfield service giants report largest pay ratios in oil, gas for 2018

Worker salaries increased at 16 of the top 20 publicly traded U.S. oil and gas companies in 2018 as the compensation gap between top executives and median employees narrowed for several independent producers, refiners and pipeline operators.

S&P Global Market Intelligence analyzed public disclosures for the top 20 U.S. oil and gas companies by market capitalization as of Dec. 31, 2018.

While Marathon Petroleum Corp. had the largest reported CEO to median employee pay ratio of 714-to-1 and the lowest median pay, the refiner's Speedway retail segment significantly affected those numbers.

"A significant portion of Marathon's business is … selling gasoline, whereas none of these other companies are, so you've got that probably weighing heavily on who that median employee is because those are … hourly wage employees at those stores, which would have a pretty significant impact on pulling that median pay down," Christopher Earnest, a partner at Compensation Advisory Partners, said in an interview.

Marathon included a supplemental ratio in its 2018 disclosures excluding Speedway employees to account for the discrepancy with its peers that came out to 118-to-1 with a median salary of $167,601.

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Oilfield service providers Schlumberger Ltd. and Halliburton Co. had the second- and third-highest pay ratios and lowest median salaries, which according to Earnest reflects the type of work typical in that sector.

"Their median employee is going to be someone working out in the field, and it could be in another country," he said, compared to oil and gas producers like Chevron Corp. and Exxon Mobil Corp. that "are full of a lot of engineers and geologists and higher-paid people in the industry at large."

This is the second year that companies have had to reveal the CEO to median employee pay ratio.

The SEC in 2017 implemented a rule that required companies in the 2018 proxy season to disclose the annual compensation of their median employee and the ratio between that individual's pay and the compensation for the chief executive officer. The initial pay ratio disclosures were based off full-year 2017 compensation.

Liquefied natural gas exporter Cheniere Energy Inc., meanwhile, fell to 116-to-1 even though CEO Jack Fusco was the third-highest-paid top executive in the oil, gas and coal industry. Fusco raked in $21.3 million in compensation for 2018 as his company's median employee salary rose to $183,131.

Phillips 66 boasted the highest median employee compensation at $196,407, up from $170,988 in 2017.

Midstream providers Enterprise Products Partners LP and Energy Transfer LP had two of the lowest pay ratios, which Pearl Meyer managing director David Bixby attributed to their master limited partnership structure.

"You've got other non-reporting entities [like general partners] that are sometimes providing compensation to those executives," he said in an interview. "You're only seeing what's being allocated to the public entity."

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