Six years ago, Houston oilman Floyd Wilson struck it rich with the blockbuster sale of Petrohawk Energy, making billions for investors and earning a reputation as a farseeing wildcatter.
His next venture, Halcón Resources Corp., fell prey to the oil bust. The company slashed more than a third of its workforce, wrote down billions in assets and filed for bankruptcy, almost completely wiping out shareholders.
But when the Houston company finished a six-week trek through bankruptcy court in September, Wilson emerged enriched again, with new shares in the reorganized company that would push the value of his annual compensation package up to $24.1 million, a figure that dwarfed his pay packages in previous years, worth $3.4 million on average, according to regulatory filings.
In the teeth of a merciless downturn that lasted two years, oil companies laid off thousands of workers and investors lost billions as scores of drillers and service firms went bankrupt. But in recent months, several of these same firms are emerging from bankruptcy as reorganized companies and carving out hefty pools of restricted stock and options for executives and top employees who were in charge when things went south.
The practice, ostensibly aimed at keeping experienced management teams in place during turbulent times, appears to reward executives who take companies into bankruptcy rather than disciplining them – even as shareholders lose their investments, corporate governance experts said. There’s a fine line, they said, between keeping executives involved in the company and over-enriching them.
“You’ve had some deals struck where the company goes bankrupt and the executives do very well, and that’s wrong,” said Dennis McCuistion, executive director of the Institute for Excellence in Corporate Governance at the University of Texas at Dallas. “That doesn’t pass the smell test at all.”
Halcón and Wilson declined to comment.
READ MORE at Houstonchronicle.com: Even in bankruptcy, oil bosses are promised riches