ExxonMobil XOM and Chevron CVX have increased their CEO pay amid declining median worker salaries. Despite the significant stock price increases, workers are struggling to make ends meet, while the CEOs are receiving record salaries and bonuses.

Delving deeper into the issue, we discovered that growing income inequality in the United States was not unique to ExxonMobil and Chevron. According to a report by the Economic Policy Institute, CEO payments at the largest 350 U.S. companies have increased 1,322% since 1978, while worker wages have grown only 18%.

Below, we will discuss the impact of ExxonMobil and Chevron’s CEO pay rise on worker pay and income inequality in the United States.

Over the past year, the global energy market has seen significant fluctuations due to various factors, including the Russia-Ukraine war and an increase in gas prices. While these factors resulted in a considerable rise in revenues for oil and gas companies, the profit was not evenly distributed among all employees.

While senior executives of some companies saw a rise in their salaries, many employees of major energy corporations suffered a decline in their annual payments. This is a concern, especially for those who depend on their salaries to make a living.

CEO Salary Hike

ExxonMobil’s CEO, Darren Woods earned $35.9 million in 2022, 50% higher than his previous year pay. He received more than $11 million extra in stock awards, his 2023 bonus doubled and his salary increased 10% year over year to $1.9 million. This news came as a surprise to many, given that ExxonMobil has been facing criticism from shareholders and activists for its climate change policies and failure to adapt to clean energy transition.

Chevron’s CEO, Michael Wirth was paid $23.6 million in 2022, a 4% increase from his previous year pay. With a 10% pay raise, his 2023 base salary became $1.85 million. This news has also been met with criticism, given the decline in Chevron’s worker pay.

Decline in Median Worker Pay

According to the SEC filings, the median pay for an Exxon worker fell 9% to $171,582, while the same for a Chevron worker decreased 12% to $161,488 in 2022. This decline in worker pay is particularly concerning, given the significant pay hikes enjoyed by the CEOs at both companies. This trend of declining worker wages and rising CEO salaries is not unique to ExxonMobil and Chevron.

Rising Income Inequality

The trend of rising income inequality is particularly pronounced in the tech industry, where CEO pay has been rising at a faster rate than in other industries. This pay disparity is not only detrimental to workers but also to the broader economy, as it contributes to slower economic growth and reduced social mobility.

Conclusion

Following the COVID-induced economic slump, crude oil prices rebounded to about $130 per barrel last year. This made 2022 the most profitable year for oil and gas companies like ExxonMobil and Chevron. The company executives reaped big rewards out of this improvement.

While the uptick in CEO pay is not something unusual, it came amid declining median worker pay.  This sparked significant criticism and brought into focus the need for advocating policies that promote greater income equality.

Following the COVID-induced economic slump, crude oil prices rebounded to about $130 per barrel last year. This made 2022 the most profitable year for oil and gas companies like ExxonMobil and Chevron. The company executives reaped big rewards out of this improvement.

While the uptick in CEO pay is not something unusual, it came amid declining median worker pay.  This sparked significant criticism and brought into focus the need for advocating policies that promote greater income equality.

Following the COVID-induced economic slump, crude oil prices rebounded to about $130 per barrel last year. This made 2022 the most profitable year for oil and gas companies like ExxonMobil and Chevron. The company's executives reaped big rewards out of this improvement.

While the uptick in CEO pay is not something unusual, it came amid declining median worker pay.  This sparked significant criticism and brought into focus the need for advocating policies that promote greater income equality.

Zacks Rank and Key Picks

Currently, both ExxonMobil and Chevron carry a Zacks Rank #3 (Hold). Investors interested in the energy sector might look at some better-ranked stocks like Par Pacific PARR, sporting a Zacks Rank #1 (Strong Buy), and Marathon Petroleum MPC, holding a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Par Pacific: PARR is worth approximately $1.63 billion. Its shares have increased 82.1% in the past year.

The company manages and maintains interests in energy and infrastructure businesses. Par Pacific’s operating segment consists of refining, retail and logistics.

Marathon Petroleum: MPC is valued at around $58.02 billion. The company delivered an average earnings surprise of 20.91% for the last four quarters and its current dividend yield is 2.30%.

Marathon Petroleum currently has a forward P/E ratio of 6.36. In comparison, its industry has an average forward P/E of 9.10, which means MPC is trading at a discount to the group.

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