Over the last quarter, several European integrated oil and gas companies have dialed down their clean energy ambitions and dialed up their core fossil fuel businesses. In part this is a response to the very high commodity prices of 2022, the pressure from some investors for ever greater near-term returns and the persistent valuation gap between US and European oil and gas players. However, it is also a response to the limited success many oil and gas companies have had in their clean energy investments, renewables (solar and wind) in particular, and a “running out of patience” with the low to zero returns they have generated thus far. Some oil and gas clients have not been able to get new renewable projects to clear their cost of capital, and others have billions of capital already invested but earning low returns. This frustration is not surprising and is consistent with the trend we are seeing in the diverging costs of capital between oil and gas companies and renewable players.
The big debate: are CEOs paid too much?
Executive compensation has become a focal point for growing stakeholder scrutiny, resurgent principal-agency problems, and general excess. Reviewing the...