A $14 million severance package might seem excessive in the midst of our tough economic times. But for the oil field services industry, it really ain’t that much, the Chronicle’s Loren Steffy notes in today’s column.
Reviewing the Smith International-Schlumberger merger, Steffy estimates that Smith’s top executive could glide away on a golden parachute worth roughly $14-$16 million. That’s not a lot when compared to other sendoffs from Houston-based oil field services companies:
- In 2000, Halliburton paid Dick Cheney $34 million when he left his post as CEO to become vice president.
- This month, BJ Services revealed a $92 million severance package for CEO James W. Stewart when BJ’s sale to Baker Hughes goes through in March.
“Cheney’s severance, an industry record at the time, now looks like a pittance compared with Stewart’s, whose parachute is so gilded it gleams among some of the biggest executive severances ever,” Steffy said.
Add to that the fact that BJ Services has about half the annual revenue of Smith and the value of its merger was about half of the Smith-Schlumberger deal. All of a sudden $14 million — a huge sum — starts to seem like a pittance. It’s also a good deal for Smith shareholders, Steffy says.