Eldar Sætre, chief executive of Statoil, was planning to retire when he turns 62 in February. Now Statoil’s board has offered to give him a big pay raise and a huge increase in retirement benefits if he’ll stay on. Sætre reportedly is now motivated to do so.
“Eldar has done a very impressive job,” Statoil’s chairman Jon Erik Reinhardsen told newspaper Dagens Næringsliv (DN) over the weekend. That’s how he justified granting Sætre, who helped Statoil get through the industry crisis set off by the collapse in oil prices three years ago, an extraordinary pay raise of 7 percent, to bring his base pay before bonus up to NOK 8.76 million a year (USD 1.12 million).
That pay level is actually well below amounts paid to CEOs of other oil companies, but it’s fairly high executive pay by Norwegian standards. The most important change in Sætre’s compensation, however, is that the foundation for Sætre’s pension is being increased by 40 percent, to NOK 8.18 million, up from NOK 5.78 million.
That boosts the value of Sætre’s pension agreement, which amounted to NOK 95 million at the beginning of this year. Pension payouts are tied to what Sætre will be earning when he retires.
The chairman of Statoil, which has spent the past several years cutting costs and staff, explained: “It’s natural that when you make changes with a longer time perspective for employment, that you make changes in the compensation terms. We started working on this early this year. We compared (executive pay) within a Norwegian framework and have also looked at other companies in the Nordic countries. We want to have competitive compensation terms, but not leading.”
Reinhardsen stressed that during Sætre’s three years as Statoil’s CEO, he’s had “a special agreement” with lower pension base because he had the opportunity to retire early. “When there’s now an agreement on a longer time perspective, the board has decided to go back to the original pension plan with pension determined by overall base salary,” he told DN.
The most important thing for Statoil was to get Sætre to continue as CEO. Sætre himself would merely state in a press release that he now “looks forward to be able to lead the company further.”
Even though his employment contract has been extended, there’s nothing to stop him from retiring before Norway’s normal retirement age of 67. The same press release states that Sætre retains the right to retire earlier than that. He could still quit just after turning 62, and retain his right to a much bigger pension.
Statoil spokesman Bård Glad Pedersen confirmed that, but claimed Sætre was motivated to continue, and that was the desired solution for the board.
A representative for Statoil employees joked that Sætre’s pay and pension hikes “are a good signal for all other employees” in the company, which is recovering from the oil price collapse of 2014: “There’s room for more negotiations.”