2024 Gassy E&P Comp Review - Payouts and Value.

The Gist (1) Due to strong share price performance, change-in-control provisions remain favorable for the group. (2) U.S. gas-focused E&Ps still lack meaningful inclusion of value creation metrics (ROCE, ROIC, ROCE vs WACC, etc) in their long-term incentive instruments. (3) Annual incentives should prioritize profit and value creation KPIs over ESG metrics to better align with shareholder value.

Two weeks ago, we shared our 2024 Oily E&P Compensation Review (HERE). This week, we're turning our attention to the gas-focused E&Ps.

Let’s dive in.

In 2024, awarded compensation—as detailed in the Summary Compensation Tables of annual proxy statements—for natural gas-focused E&Ps rose 11% year-over-year.

However, awarded compensation isn’t the same as realized compensation, given the vesting restrictions and performance hurdles tied to long-term incentive (LTI) instruments.

For a clearer view of what CEOs actually took home, the chart below highlights realized compensation—which includes salaries, annual bonuses, exercised stock options, and vested equity. Notably, it declined by 19% year-over-year.

The line in the chart represents the three-year smoothed average of total shareholder return (TSR), which includes both price appreciation and dividends of the represented group.

Broadly speaking, when the stacked bars (realized compensation) and the TSR line move in tandem, it signals alignment between shareholder outcomes and management incentives—or pay-for-performance.

A company-by-company breakdown follows below.