Petrofac has awarded eligible employees a 5% pay increase, reversing pandemic related cuts initiated two years ago, as the company now looks to “recovery and growth” in 2022.
Responding to the immediate impact of the Covid-19 pandemic in April 2020, the oilfield services giant cancelled previously awarded pay increases and implemented a 10% pay cut at all levels.
Alongside the salary and bonus cuts, the measures saw the Jersey-headquartered company announce a 20% reduction in headcount as a result of the downturn.
The measures were partially reversed last April, when it approved a 5% global pay increase to those affected by the cuts, though this excluded directors and the senior executive team.
However, headcount reductions have continued through the period, and of the 11,500 employees at the end of 2019, 8,200 remained as of the end of 2021 – a contraction of nearly 30%.
In its 2021 report, Petrofac said it would award a further 5% increase to employees affected by the initial cuts, effective of April 2022.
“In reversing the 10% pay cut, the company expresses confidence in the future and gives due recognition for the hard work and loyalty of our employees in this challenging period,” it said.
It has also reversed the 10% cut in salary for its senior executive team, and the 10% cut in fees for the chairman and the non-executive directors.
Meanwhile, chief executive Sami Iskander received a compensation package just shy of £1.8 million for 2021, inclusive of an annual salary of £894,000.
“Our employees have shown tremendous loyalty and commitment over the last few years, despite experiencing pay cuts and low or zero bonuses,” the report added.
The past year has seen the company face serious challenges, in particular a Serious Fraud Office (SFO) investigation which saw it plead guilty to failing to prevent former senior executives from paying £32m in bribes to help it secure contracts in Iraq, Saudi Arabia and the United Arab Emirates.
The investigation concluded with a ruling requiring the company to pay £77m for seven separate counts of failure to prevent bribery between 2011 and 2017.
While its latest filing makes clear that no current employees or directors were charged or convicted in relation to the SFO’s findings, Petrofac said that “in recognition of the corporate failings that led to the court penalty” four individuals “in positions of responsibility at the time”, and who have subsequently left the business, have had their outstanding bonus awards cancelled.
In addition, an announcement late on Tuesday confirmed that non-executive director and former CEO Ayman Asfari had received formal written confirmation from the SFO that he is no longer a suspect in its investigation.
In the annual report, Mr Iskander said the investigation had been a “painful learning experience” and noted the “significant” commercial and reputational impact it had had.
While the business is now “rightsized” and the SFO investigation behind it, the company must now focus on improving its results. 2021 saw revenue fall 25% on the previous year to just over $3bn, while EBITDA plunged 51% to $104m, leading to net losses of $195m for the year.
However, in its filings Petrofac said it has halted the decline in its 2021 backlog, and now awaits news on a global pipeline of some $37 billion in work scheduled to be awarded to the industry by the end of 2022.