Santos chief executive Kevin Gallagher’s huge salary package disclosed in annual report
Santos boss Kevin Gallagher’s annual salary is in the realm of a megadraw lottery win – and 147 times the amount taken home by the average South Australian worker.
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Santos chief executive Kevin Gallagher has pulled in a massive $11.26 million pay haul in return for turning around the company’s fortunes, propelling him into the upper echelons of CEO pay in Australia.
The figure – revealed in the Santos annual report – is about 147 times average annual earnings in South Australia, which come in at $76,700.
The boss of Adelaide’s largest company, who took over when the share price was in the doldrums and the company’s debt load was huge, was awarded more than $7.3 million in long-term incentives in 2019, paid out as shares.
In order to earn these shares, he had to hit targets which measured how Santos performed against other companies in the energy sector and the ASX100 list of Australia’s top 100 companies, and the company’s return on capital.
He was deemed to have hit all of these targets in full, and therefore earned 100 per cent of the possible long-term payments.
Mr Gallagher was also paid $1.96 million in base salary, $1.16 million in cash as a short-term incentive, and $766,752 in short-term incentives which vested last year.
The overall figure is a huge increase on the $4.5 million he was paid in 2018. However, it is the first year in which he was eligible for long-term incentives which are measured over four years.
Other CEOs on huge pay packets include Macquarie Group’s Shemara Wikramanayake, who topped the nation in 2019 with $17 million, while Qantas CEO Alan Joyce made $23.88 million in 2018.
While Mr Gallagher’s pay packet is huge, he has delivered the goods, increasing the company’s share price from $3.41 to $8.17 since he started in February 2016, fending off a $7 per share takeover bid from US company Harbour Energy, and reducing what was a huge debt burden for the company when he started.
He has also overseen large takeovers such as the $US2.15 billion takeover of Quadrant Energy in 2018 and the $US1.39 billion purchase of ConocoPhillips’ northern Australian assets.
It hasn’t been without pain, however, with Santos sacking hundreds of people during his tenure in a bid to bring costs under control.
Santos last week had to hose down new rumours of large job losses in South Australia, saying there will be “no net reduction’’ in local jobs, despite a company restructure that will mean some positions moving to Queensland.
Mr Gallagher said in a statement last week Santos would keep its corporate headquarters in Adelaide, as well as its new “midstream and energy solutions business’’. However, he said the company had previously announced it would base its offshore upstream operations in Perth and its onshore upstream operations in Brisbane.
Mr Gallagher said this would mean some jobs now based in Adelaide would move to Brisbane, while others would move from Brisbane and Perth to Adelaide.
Details of Mr Gallagher’s pay packet were announced as the company posted a 7 per cent rise in annual net profit as a jump in production helped offset weaker gas and oil prices across the year.
Net profit rose to $US674 million ($A1.0 billion) for the year ended December 31, while revenue from ordinary activities climbed 10 per cent to $US4.03 billion.
Underlying profit fell 1.0 per cent to $US719 million for the year ended December 31, from $US727 million a year ago.
The company declared a final dividend of US5c per share, below last year’s payout of US6.2c per share.