Oil and gas companies that have pursued production or reserve growth have underperformed companies that have instead focused on shareholder returns, even if that meant slower growth. More to the point, companies that have executive compensation tied to these growth metrics have also fared worse. “Most oil and gas companies incentivise their management to pursue growth, rather than focus solely on shareholder returns,” Andrew Grant, a senior analyst at Carbon Tracker, wrote in a new report . Carbon Tracker argues that these incentive packages result in companies engaging in “value-destroying behaviour.” Oil executives are rewarded for growth due to an array of incentives, including production or reserve replacement targets. There are also more subtle incentives, such as rewards based on cash flow or earnings. That may not sound problematic, but earnings can be gamed in such a way as to create the semblance of financial improvement, while in reality […]