ChevronTexaco Slashes Bonuses for CEO, Execs

ChevronTexaco Corp. Chief Executive David O’Reilly and other top executives collected sharply lower bonuses for 2002, a year that included a 66% decline in net income and a $23 drop in the oil company’s stock price.

The San Ramon, Calif.-based company awarded O’Reilly a bonus of $700,000 for the year, down 61% from his bonus of $1.8 million in 2001. That year, however, the CEO also collected a special $3.2-million bonus for completing the merger of Chevron Corp. and Texaco Corp., according to a filing with the Securities and Exchange Commission on Monday.

Overall, O’Reilly’s annual pay package totaled $4 million last year and included an 11% raise in base pay to nearly $1.1 million and a three-year performance award of $2.2 million.

The total 2002 package is 45% lower than O’Reilly’s compensation of $7.3 million in 2001. But without the 2001 merger bonus, the difference between the two years would not be all that great -- just $46,000 less in 2002. The company also granted O’Reilly stock options for 200,000 Chevron shares, which would be worth $10.8 million if the shares increase in value by 5% a year for 10 years.

Chevron’s compensation committee said it gave the firm’s top executives lower bonuses because of 2002’s disappointing share performance and lower net income, according to the filing. The committee nonetheless gave O’Reilly a pay raise last year “in recognition of his accomplishments during 2001, including his leadership during the successful integration of Chevron and Texaco following the merger.”

In 2002, ChevronTexaco posted net income of $1.1 billion, or $1.07 a share, down from 2001 net income of $3.3 billion, or $3.09. Revenue fell nearly 7% to $99 billion. The company’s stock price fell 26% in 2002 to finish the year at $66.48. On Monday, Chevron shares closed up 36 cents to $63.92 in New York Stock Exchange trading, but they are still down 3.8% this year.

On Monday, Chevron’s headquarters was the site of an antiwar protest, where about 400 people tried to block the oil company’s entrance. Although the gathering was largely peaceful, San Ramon police said they had arrested about 50 protesters by midmorning.

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Reuters was used in compiling this report.