Updates from Vitol Holding BV
Subscribe to myFT Daily Digest to be the first to know about Vitol Holding BV news.
Vitol handed top executives and staff a record salary, giving the equivalent of more than $ 7 million to each of the approximately 400 partners of the London-led oil trading company.
The exceptional payout follows one of the best years for the company, which, after a stuttering start in 2020, has emerged as one of the big winners in the pandemic-induced drop in oil prices.
In the year through December, the privately held company brought in $ 2.9 billion through share buybacks, which go directly to key employees led by chief executive Russell Hardy.
The payroll, which highlights the enormous fortunes that can be made from the oil and other commodities trade, follows the death last year of longtime chief executive Ian Taylor, who led the transformation of ‘a small Dutch fuel dealer into the world’s largest independent oil tanker. Trader.
Vitol declined to comment.
The company, which is still registered in the Netherlands but whose senior executives are primarily based in London, is far from a household name in the UK but has grown rapidly over the past two decades, creating a long line of millionaire oil merchants in the British capital. who rub shoulders with hedge fund managers and investment bankers among the best employees in the capital.
The payment comes after a record year for Vitol, which benefited from the turmoil created by the coronavirus pandemic. As major oil producers grappled with falling commodity prices, traders profited by betting on sharp price swings, storage deals and other opportunities created by market volatility.
Other private energy traders, including Trafigura, Mercuria and Gunvor, whose top executives are based in Geneva, have also had bumper years due to volatile oil prices.
However, not everything has gone smoothly for the commodities trading industry, with some companies under investigation in the United States, Switzerland and elsewhere examining historic allegations of bribery and corruption. .
Late last year, Vitol agreed to pay more than $ 160 million under a deferred prosecution agreement with the US Department of Justice after admitting bribery schemes in Brazil, Ecuador and in Mexico involving employees and agents. Vitol said in May it was working hard to “mitigate compliance risks” across its business.
Payments from Vitol staff, first reported by Bloomberg, were disclosed in annual results filed this week in Luxembourg.
These show that in the year to December, Vitol reported a net profit of $ 3.2 billion, up from $ 2.3 billion in 2019, on revenue of 140 billion dollars, making it the best performance since the company was founded over 50 years ago.
Net debt stood at $ 396 million, or just 3% of its value of $ 12.2 billion. The low level of debt sets Vitol apart from most of its peers.
The accounts also show that Vitol repurchased $ 2 billion in shares in 2020 and $ 2.2 billion in 2019.
In addition to buyouts – the company’s preferred method of returning excess cash to its partners – it paid regular salaries and bonuses. Its 2,480 employees shared $ 1.23 billion in compensation over the period, up from $ 736 million in 2019.
“Based on the actual results achieved up to the end of March 2021, we expect to achieve a reasonable result in 2021 and Vitol will continue to expand its core business through acquisitions of selective assets,” the accounts indicated. .
Vitol has also spent $ 1 billion this year on U.S. shale assets and is expected to take a 5% stake in Vostok Oil, a giant Arctic oil project developed by Russian oil company Rosneft.
Like its peers, Vitol simultaneously seeks to invest in renewables and other markets such as carbon trading as the world moves away from fossil fuels.