HOUSTON, Feb 5 (Reuters) - The chief executive officer of Linn Energy LLC, a U.S. oil and gas company that is exploring strategic options and looking for ways to fix its balance sheet, is eligible for a $6.9 million cash award this year, according to a regulatory filing.
Linn Energy, a master limited partnership (MLP) which has been hit hard by the more than 70 percent drop in crude prices, said in a filing with the U.S. Securities and Exchange Commission on Thursday that its board altered its compensation plan to enable the company’s executives to earn cash compensation in 2016.
“Retaining key leadership and our talented employees is a top priority for Linn Energy as we engage in this process and maintaining continuity of leadership will help secure the best possible outcome for the company,” a company spokesman said on Friday.
Linn’s board approved cash incentive awards totaling about $15 million for six executives, including Chief Executive Officer Mark Ellis.
The executives must meet certain targets to receive the incentive payments, but those targets were not spelled out in the regulatory filing.
Offering executives financial incentives to stay through tumult, be it a merger or restructuring, is a common practice.
Linn units were trading around $30 in mid-2014 when crude oil was around $100 a barrel. On Friday, the stock closed down 58 percent at 50 cents per unit. MLPs trade in units, rather than shares.
MLPs pay no taxes at the corporate level and pay out most profits to investors in the form of distributions. In October, Linn Energy said its board approved the elimination of payouts to unitholders in a bid to save cash. Investors typically seek out MLPs for their rich distributions.
The company’s latest proxy report shows that Ellis received $10 million in compensation in 2014, which included a salary of $900,000 and unit awards that had a value at the time over $7 million. (Reporting by Anna Driver; Editing by Bernard Orr)