Bahamas Petroleum CEO package slashed in cost-cutting exercise

Oil and gas exploration firm, Bahamas Petroleum Company, announced a number of permanent changes to the contract of its chief executive officer on Monday, which it said “significantly reduces” the basic salary, wrote off accrued cash payments, and ended the accrual of conditional share entitlements, while at the same time continuing to align management and shareholder interests.

The AIM-traded firm said that, following the fall in the oil price during 2015 and general slowdown in the oil and gas sector, the CEO proposed “substantial changes” to his compensation package to reduce cash costs to shareholders.

Since 1 April 2016, 90% of his compensation had reportedly been forgone to be repaid in an equal mix of cash and shares, conditional on successful funding arrangements for an exploration well consistent with licence obligations, the board said.

It explained that the key terms of the new contract included no change to the term of the existing contract, as previously announced, following which a three month notice period from either party would apply.

Headline annual salary would be reduced to $375,000, paid monthly, with all deferred cash entitlements, totalling approximately $1m, to be written off.

No further share entitlements would be awarded or accrued.

Additionally, all existing share entitlements - totalling 63,567,276 ordinary shares - and options would be retained, while continuing to be conditional on the successful conclusion of funding arrangements for an exploration well.

There would be no future entitlement to company pension contributions, with accrued but unpaid entitlements totalling approximately $0.2m to be written off.

“We consider the changes outlined to the CEO's contractual arrangements to be in the best interests of shareholders, by removing future cash obligations whilst maintaining the incentivisation of our CEO at this important and exciting time for the company,” said non-executive chairman Bill Schrader.

“Importantly, alignment between management and shareholders has been maintained.”