A Santos spokeswoman said its board actively monitors corporate culture and works with management for continuous improvement.
“The board was fully aware of the results of the staff survey and other corporate culture indicators in determining the scorecard results,” she said.
In 2021, general manager Kevin Gallagher received a $1.4 million cash bonus and another $1.6 million was split among his four highest-paid subordinates. They will also receive the same value in Santos shares.
Gallagher’s $6 million remains
The investigation, which has produced a picture of a disjointed business where late decisions come from senior management, was conducted three months after Santos’ board in April 2021 offered chief executive Kevin Gallagher a ” Growth Projects Incentive” of $6 million to stay until 2025 to complete the projects he started.
Proxy adviser Institutional Shareholder Services said the new incentive was excessive and a reward for what many shareholders would consider essential “day job” responsibilities.
ISS said in its April report that the new incentive combined with Gallagher’s current compensation, totaling $7.2 million in 2021, resulted in a salary nearly three times the median for similar positions.
In the five years under Gallagher before the new bonus was announced, Santos’ share price doubled. At the time of the bonus announcement, it was widely reported, although unconfirmed, that he was in the running for the job of chief executive at rival Woodside.
When Santos chairman Keith Spence announced the bonus, he said Gallagher was well recognized as one of Australia’s top chief executives and “critical to the success of the company’s strategy”.
A spokeswoman for Santos said it operates in a complex and dynamic environment and has integrated three companies through mergers and acquisitions over the past three years.
“We have a very adaptive management team committed to leading Santos,” she said.
Staff sentiment is worse in the west
Gallagher’s $6 million growth incentive is largely dependent on the successful delivery of three projects: Moomba carbon and capture in SA, Barossa LNG north of Darwin and Dorado oil off WA.
Two of those projects, Barossa and Dorado, estimated to cost $7.8 billion, are run from the Perth office, where employee feedback was “significantly below company-wide results and much lower than external benchmarks”.
Less than a quarter of the group responsible for WA, NT and Papua New Guinea felt that decisions were made in a timely manner: an essential attribute for delivering complex projects on time and within budget .
The more than 400 employees of the group who responded to the survey seemed satisfied with what they were responsible for doing, with 74% of them agreeing that their work offered challenging and interesting opportunities.
However, less than one in five agreed that Santos was open and honest in its communications with employees or thought the company was well organized. Only 23% of the group agreed they had confidence in Santos’ senior management, with 49% disagreeing and the rest unsure.
Shareholders will vote on Gallagher’s $6 million incentive at the company’s annual general meeting on Tuesday, May 3.
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