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Tullow Oil’s founder and chief executive, Aidan Heavey, will continue to receive his full pay and benefits for six months even after he steps up to become chairman of the energy group.
Mr Heavey is handing over the reins to Paul McDade, currently chief operating officer, and will become non-executive chairman from the end of April – a move that goes against governance best practice.
Mr McDade will take over the top job on a basic salary of £725,000, which is 18 per cent lower than that of his predecessor, the company’s annual report reveals.
Meanwhile, Mr Heavey, whose current basic salary is £886,074, will continue to receive his current level of remuneration for six months, even if shareholders approve his elevation to chairman at the company’s annual meeting on April 26, as expected.
The company said it felt this arrangement was appropriate as it took into consideration Mr Heavey’s service as chairman of the board; compensation for abridging his contractual notice period; and the fact he will be available, on an “exclusive and full-time basis”, for those six months.
Thereafter, Mr Heavey’s salary will consist of just the chairman’s fee of £280,000 a year.
“Following the initial six-month period, Aidan will be expected to dedicate at least 70 days per year to his duties as chairman,” the company added in its annual report.
Mr Heavey, who had no experience in the oil and gas industry when he founded Tullow, received a total pay packet worth £2.89m for 2016, up marginally on £2.84m the year before.
Tullow made a loss of $908.3m for 2016, down from a $1.3bn loss a year earlier.
The group, which pressed ahead with capital intensive projects during the oil price slump, has started discussions with lenders over refinancing its $3.3bn reserve-based lending facility.