Aker Solutions is the latest Norwegian company to release financial reports that reveal what their own executives earn. Employee representatives had trouble accepting how the oil service firm’s chief executive could receive a 50 percent increase in his total compensation last year at a time when around 5,000 employees have lost their jobs, and those remaining have endured pay freezes or pay cuts.
Newspaper Dagens Næringsliv (DN) reported that Luis Araujo, a Brazilian who took over as top boss at Aker Solutions in 2014, benefited from an increase in the company’s share price, which rose from NOK 22.80 in February last year to NOK 41.37 at the end of 2016. That boosted Araujo’s “variable pay” upwards by NOK 4.8 million (USD 564,000). On top of that came his base salary, which was unchanged at NOK 7.1 million.
Various other payments made to Araujo brought his total compensation in 2016 up to NOK 12.1 million (USD 1.4 million), compared to NOK 8.1 million in 2015, an increase of 50 percent.
“It’s clear that it’s difficult to receive understanding among the employees that they’re supposed to accept no raises at all, or in some cases pay cuts, when the top managment reaps large pay additions,” Atle Teigland, employees’ representative at Aker Solutions, told DN. “It makes no sense to most folks.”
Araujo isn’t the only top executive in the firm controlled by industrial tycoon Kjell Inge Røkke, who ironically enough has maintained ties to Norway’s Labour Party, to reap major jumps in their compensation last year. Aker CEO Øyvind Eriksen was paid NOK 25 million (USD 2.9 million) lin 2016, including NOK 15.3 million in base salary and variable pay of NOK 9.6 million tied to performance and the company’s share price. Kristian Monsen Røkke, Kjell Inge Røkke’s son who runs Aker’s investment company Akastor, was paid NOK 11.1 million, while Aker’s finance director, Frank Reite, was paid NOK 9.2 million, more than double the NOK 3.4 million he was paid in 2015.
The top executives clearly have profited from the massive staff cutting that pleased investors enough that they sent Aker’s share price up. Since their riches come on the backs of other’s trauma, “it’s challenging for us, and difficult to justify for the employees, Teigland told DN. He said the board doesn’t listen to the employee representatives’ opinions on executive pay. “We express our opinions to the board, but we have no majority,” he told DN.
An Aker Solutions spokesperson claimed it “was not natural” for the company’s management to comment on executive pay, which is set by the board. The company’s share price, meanwhile, has continued to rise, closing last week at just under NOK 51.75 and indicating that the executives may continue to benefit from that this year.