World's largest oil trader pays over $2.2b to top execs

LONDON • Vitol Group paid a record of more than US$1.6 billion (S$2.2 billion) to its top executives and staff through share buybacks last year, highlighting the riches enjoyed by the partners who own the world's largest oil trading house.

The buybacks - Vitol's principal way of rewarding about 350 top employees who own shares in the privately held firm - bring to more than US$10 billion the distributions paid out from 2007 to 2017. Vitol has enjoyed strong profits in recent years, including in 2016 when net income surged to its third highest ever as it rode the ups and downs of the oil market. More recently, however, net income has been weaker.

The payout leaves a small cadre of traders personally benefiting from the boom and bust in oil prices over the last decade. Led by chairman Ian Taylor, Vitol is the world's largest independent oil trading house. Each day, it moves seven million barrels of crude and petroleum products - enough to meet the demands of Germany, France, Italy and Britain combined.

Vitol distributed US$1.62 billion to its employee-shareholders last year, up almost 45 per cent from 2016, according to the annual accounts of Vitol Holding II, a Luxembourg entity that is the holding company for the group. The 2017 buybacks - made on top of salaries and regular bonuses - surpass the previous record set in 2010, when about US$1.45 billion was distributed. Vitol declined to comment.

While energy-rich nations and oil majors such as Exxon Mobil and Royal Dutch Shell suffered from the oil crash in 2015 and 2016, energy traders including Vitol benefited from market volatility and opportunities to lock in profits that come from market fluctuations. They arrange to store oil during times of surplus and sell futures contracts for delivery at higher prices. Vitol has also made money by selling investments in oil terminals and pipelines.

"It is pretty bloody tough," Mr Taylor said in an interview in March. "And I don't think anybody is making a lot of money." Mr Taylor, the firm's leader over more than 20 years of impressive growth, has delivered profit increases on a par with those enjoyed by Silicon Valley tech companies. Under his tenure, net income climbed from US$22.9 million in 1995 to as much as US$2.28 billion in 2009.

The buybacks - Vitol's principal way of rewarding about 350 top employees who own shares in the privately held company - bring to more than US$10 billion the distributions paid out from 2007 to 2017.

Although a trader at heart, Vitol is also emulating private-equity players by using its energy-industry expertise to buy, restructure and revive unloved assets. So far this year, it has sold shares in two ventures via initial public offerings.

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A version of this article appeared in the print edition of The Straits Times on July 26, 2018, with the headline 'World's largest oil trader pays over $2.2b to top execs'. Print Edition | Subscribe