North Sea oil services heavyweight’s chief executive sees total pay fall 30%

WOOD chief executive Robin Watson has seen his total pay fall by around 30 per cent after the company scrapped bonuses as the fallout from the coronavirus crisis weighed on key markets such as the North Sea.

The Aberdeen-based engineering group’s annual report shows Mr Watson’s remuneration was worth £1.2 million in total last year, down 28% on the £1.7m he earned in the preceding year.

The fall reflects the fact Mr Watson did not receive a bonus last year. He was paid a £0.8m bonus in 2019.

Wood’s remuneration committee decided that whilst the group’s management team had performed well it was not appropriate to pay a bonus in respect of last year, during which Wood faced big challenges.

Wood was impacted by the downturn in the oil services market triggered by the pandemic. Wood lost $228m net of exceptional costs last year, after making $73m profit in 2019.

In response to the challenges posed by the pandemic, Wood suspended dividend payments to save cash. The company benefited from the support the Government provided for employers to protect jobs under the coronavirus furlough programme.

On bonuses, the report states: “We and management believe zero payment is an appropriate response given Wood’s financial performance, suspension of the dividend, the use of government support schemes and the overall business context.”

Mr Watson’s salary payments fell to £0.73m from £0.75m. The report notes that the Board, executive directors, senior leaders and around 3,300 employees elected to take on average, a voluntary 10% reduction in base salary for nine months from April 2020.

However, Mr Watson was awarded shares worth £0.35m in 2020 under the group’s Long Term Incentive Plan. No LTIP awards vested in the preceding year.

Wood has diversified into markets such as environmental engineering under Mr Watson’s leadership, helped by the £2.2bn acquisition of AMEC Foster Wheeler in 2017.

The LTIP award recognised Mr Watson’s success in squeezing $231m synergies out of the enlarged group.

Mr Watson said last month that Wood expects to be in the North Sea oil services business for years. He reckons newcomers to the area could fuel an increase in activity levels.