Exxon Mobil Corp. (NYSE:XOM) is implementing a new compensation policy, a significant shift for the U.S. energy giant as it expands its trading operations. The updated structure, unveiled internally last week, divides traders into two categories: “system traders” involved in buying and selling physical commodities to support the company’s operations, and risk-taking traders aiming to enhance company profits. Only the latter will be eligible for performance bonuses, which will be exclusively in cash and disbursed starting in December 2024.
This change is noteworthy within Exxon, where compensation has been a source of contention as the company bolsters its global trading business. Historically, Exxon compensated traders with regular salaries supplemented by modest stock awards for top performers, a model that has frustrated new hires accustomed to the industry’s common practice of receiving substantial cash bonuses tied to performance.
The new compensation plan follows Exxon’s consolidation of all trading desks into a single unit six months ago, now led by former human resources chief Tracey Gunnlaugsson. The company has been actively working to expand its trading business since 2018, facing challenges such as pandemic-related cost-cutting and cultural differences between traders and the company’s conservative management style.
Exxon’s recent move to provide cash bonuses aligns with industry norms and aims to attract and retain top talent in its trading division. The company is taking steps to grow its trading activities at a measured and thoughtful pace, as outlined by CEO Darren Woods, emphasizing optimization rather than speculative positions within the vast global footprint of Exxon’s facilities, ships, and storage terminals.
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