Good post on XOM's compensation practices:
Message 29344592
It would be interesting to know how the other companies compared to XOM compensate their execs.
Re the table comparing XOM's ROCE to that of CVX, BP, RDS ... to my knowledge XOM has been the leader in such comparisons for years and years.
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According to the latest proxy statement, Exxon has not awarded a stock option to any employee, CEO included, since 2001.
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Instead of options on stock, the company rewards executives mostly with restricted stock. These restrictions last for 10 years even in the event of retirement. In my opinion, this is the key component for aligning interest. It makes management share the same experience from company performance that a long-term shareholder would experience. This is critical for a company where capex decisions affect returns a decade or so into the future. It turns all executives into de facto risk managers. This is especially true for the most senior of managers, with the highest amount of restricted stock and closer to retirement. They must ensure that the pipeline of projects receiving funding will support the earnings needed ten or more years from now when they will be able to sell their stock.An additional element, not related to the program but also important to understand the care that goes into aligning interests with shareholders is that company policy does not allow employees to enter into hedging contracts for the stock, or other indirect hedging arrangements through commodities contracts.
The resulting executive group is by design a long-term owner of the company, continuously trying to optimize capital use and minimize risks. I think there is a direct link between the incentive packages described here and the track record of being a great steward of shareholder capital.
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