The Santos Ltd (ASX: STO) share price is up today. The positive price movement comes as the oil and gas producer announced a new incentive pay scheme for its CEO.
At the time of writing, the Santos share price was trading for $7.11, up 0.57%. By comparison, the S&P/ASX 200 Index (ASX: XJO) is 0.31% lower.
Let's take a closer look at today's announcement.
Santos share price and CEO pay up
Santos announced its board has agreed to provide CEO Kevin Gallagher a "once-off growth projects incentive" to ensure he "sees through the successful delivery of Santos' major growth projects and energy transition strategy to 2025".
In today's statement, Santos credited Mr Gallagher with turning around its business since his arrival in February 2016. Investors seemingly agree. The Santos share price surged from a base of $2.92 in 2016 to trade at $9.00 just before the 2020 COVID-19 market crash. Post-crash, the share price is still 142.47% higher than it was on Mr Gallagher's first day.
According to Santos, shareholders have received a 159% return on investment during the CEO's tenure, when dividends are taken into account.
What's the incentive?
The incentive scheme has a face value of $6 million. It will be delivered in the form of share acquisition rights, "subject to strict performance hurdles related to the successful delivery of major growth projects, the energy transition strategy and continued employment," according to the company.
Santos listed the Barossa, Dorado and Moomba carbon capture and storage projects as areas of major growth. The company also wishes to become carbon-neutral by 2040. Santos is factoring in the achievement of this commitment as part of Mr Gallagher's incentive.
According to a recent study, ASX shareholders have been pushing for CEO compensation that includes incentive packages, such as this one.
Management commentary
Santos chair Keith Spence said Mr Gallagher had a clear track record of delivering for shareholders:
Kevin is critical to the successful delivery of the company's strategy, major growth projects and driving the energy transition over the next five years.
Commenting on today's news, Mr Gallagher said:
It is a privilege to lead Santos. We have made significant progress on our transformation journey, but the job is not yet done.
I am delighted to commit to continuing to drive the delivery of our growth strategy, the transition to a leading clean fuels business and to achieve our net-zero emissions targets.
Santos share price snapshot
The Santos share price has increased 54.01% in the past 12 months. In early March, the company hit a 52-week high of $7.80 as oil prices boomed on OPEC production cuts.
Santos has a market capitalisation of $14.8 billion.
