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Monday, July 15, 2024

Acting CEO takes over at Statoil

Eldar Sætre claimed he didn’t want to become Statoil’s new chief executive on a permanent basis when he was named acting CEO last fall. He clearly changed his mind, with the company announcing on Wednesday that Sætre will succeed Helge Lund as head of Norway’s largest company.

Statoil has made its acting CEO, Eldar Sætre, the company's permanent top executive. PHOTO: Statoil
Statoil has made its acting CEO, Eldar Sætre, the company’s permanent top executive. PHOTO: Statoil

Statoil’s board had begun to attract criticism for taking too much time to find a new CEO for the company, in which the Norwegian government still holds a 67 percent stake. The top job at Statoil is arguably the most important in Norwegian business, and speculation had flown over candidates for the post.

Several included some of Sætre’s colleagues at Statoil, but Norway’s state oil company had never appointed a new chief executive from within its own ranks before. Among the candidates was Statoil’s strategy director John Knight, but he was dismissed by many because he’s British, not Norwegian. The CEO of state-controlled Statoil, it was argued, must be well-versed in both Norwegian politics and Norwegian business culture. Foreign candidates were also likely too expensive for Statoil, because executive pay levels outside Norway are much higher than what’s deemed acceptable in the country’s social welfare state despite Norway’s high prices and high cost of living.

‘Solid guy’
Statoil’s board thus opted for the safe and well-received solution of keeping Sætre, a former chief financial officer at Statoil, in the CEO’s job. Board Chairman Svein Rennemo claimed on Wednesday that Sætre was the board’s first choice. Analysts, economists and employees quickly applauded the choice. Sætre himself said he found out after stepping in as CEO on an interim basis that he enjoyed both the work and the challenges.

“When I came into the job, I experienced how inspiring and energizing this position is,” Sætre said in a prepared statement. “I enjoy the challenges, and look forward to taking on the job with an even longer perspective.”

Rennemo said he was very satisfied that Sætre changed his mind about the job, and that Statoil’s board has now found an internal candidate for the job. That can inspire the rank and file within Statoil, and the company’s labour organizations expressed satisfaction as well. Employee representative Bjørn Asle Teige called Sætre “a solid guy” who’s needed at a time of low oil prices and cutbacks in the once-booming oil business. Analysts like Trond Omdal at Pareto Securities pointed to Sætre’s “good network,” telling Norwegian Broadcasting (NRK) that Sætre’s knowledge of operations and contacts “not just at the top of the company but down through the organization, will be a strength.” Omdal thinks Sætre will also have “better control over the strategy division than Lund had.”

“Eldar stands out with his long experience and his ability to create change,”  Rennemo said, calling that necessary attributes “in times like these.” Rennemo said he was “extra pleased that we were able to recruit the next CEO from within Statoil.”

‘Key focus’ on Norwegian fields
Sætre, born in 1956, has been part of Statoil’s top management since 2003 and he played key roles in both the company’s stocklisting, when the state sold off 33 percent of Statoil’s shares, and in its acquisition of Norsk Hydro’s oil and gas division. He said on Wednesday that Statoil’s “key focus” now will be on the Norwegian continental shelf, “where we will look to deepen and extend our position. At the same time we will continue to pursue international opportunities, where we have competitive advantages.”

Further extension of Statoil’s position off Norway is not likely to be welcomed by those concerned with environmental and climate issues, but will come as a relief to those worried about a slowdown in Norway’s oil-fueled economy. Sætre claimed Statoil was “well-positioned for the future,” with a “solid financial platform and a highly competent organization.” He said Statoil can benefit from having “started our work to improve competitiveness early.” That has included cost-cutting and job losses but Sætre said his “first and foremost responsibility” will be “safe and secure operations.”

Sætre will need to present fourth-quarter and full-year results for Statoil later this week, and they’re expected to fall in line with oil prices. That suggests more cost-cutting and Sætre’s own income package reflects that.  He has accepted a base salary of NOK 7.7 million (USD 1 million), less than Lund received and much less than the salaries paid to CEOs of oil companies abroad. He will also, however, be eligible for what Statoil called “annual variable pay and long-term incentives” in the form of bonuses. Berglund



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