Ever since the Coronavirus crisis took its toll on the Oil & Gas industry, Fortune 500 companies have been scrambling to protect their dividends and keep their shareholders happy. The results have been generally negative for workers at those companies. ExxonMobil has been in the news a lot recently for taking on cost cutting measures in the name of preserving their dividend. ExxonMobil is by no means the only company trying to please its shareholders but for this article we’ll use them as an example.
Last month Reuters reported that Neil Chapman, ExxonMobil’s Senior Vice President, stated that the company would be cutting capital and operating expenses to protect their dividend (Seba). ExxonMobil has since announced that they will no longer be matching U.S. employee’s contributions to their retirement savings plans. The suspension of these benefits officially begin on October 1st, 2020. This is the latest step in a long line of troubling economic developments in which companies are attempting to save their dividend. According to Reuters, ExxonMobil has now experienced, “its first back-to-back quarterly loss in 36 years because of the drop in demand during the novel coronavirus pandemic,” (Seba). This announcement comes on the heels of several stories claiming that ExxonMobil was effectively laying people off through PIP.
A PIP or “Performance Improvement Plan” is essentially a severance offer to leave the company. According to Forbes, ExxonMobil made changes to their performance evaluation process in order to justify more job cuts. Back in April they raised the number of employees who were in the “Needs Significant Improvement” (NSI) category from 3% to 8% of all US workers (Gross). Employees who were placed in the NSI category qualified for a PIP. ExxonMobil employs about 75,000 people, so an 8% reduction would result in about 6,000 people out of a job. According to Business Insider, the changes made to ExxonMobil’s employee evaluation process were an attempt to, “cut more jobs without traditional layoffs,” (Jones).
All of these decisions are being made in the name of protecting dividends. ExxonMobil has raised the payout on their dividend for 37 straight years, and they would very much like to continue that streak (Hiller et al.). When corporations prioritize their dividend the result is typically a lot of employees out of a job.
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- The Retirement Group or www.theretirementgroup.com
- Jones, Benji. “Leaked Documents Reveal Exxon Changed Its Employee Ranking System amid the Coronavirus Pandemic, Putting More Workers at Risk of Getting Cut.” Business Insider, 24 July 2020.
- Jones, Benji. “Exxon Made Managers Dub Some Employees Poor Performers to Cut Staff – Business Insider.” Business Insider, Business Insider, 30 July 2020, https://www.businessinsider.com/exxon-managers-dub-some-employees-poor-performers-cut-staff-2020-7.
- Hiller, Jennifer, et al. “Exxon Prepares Spending, Job Cuts in Last Ditch Move to Save Dividend.” Reuters, 30 July 2020.
- Gross, Elana. “ExxonMobil Reportedly Changed Its Employee Review Process To Increase Performance-Related Job Cuts.” Forbes, 24 July 2020.
- “Retirement Plans-Benefits & Savings.” U.S. Department of Labor, 2019, www.dol.gov/general/topic/retirement.
- “ExxonMobil Corp. Layoffs – TheLayoff.Com.” TheLayoff.Com – Layoffs Discussion Board, 27 July 2020, https://www.thelayoff.com/exxon-mobil
- Sklover, Alan. “‘My Severance Agreement Says I Can Never Re-Apply; Can I Get around That?’ – Sklover Working Wisdom.” Sklover Working Wisdom, 20 Mar. 2014, https://skloverworkingwisdom.com/my-severance-agreement-says-i-can-never-re-apply-can-i-get-around-that/.
- “Generating Income That Will Last throughout Retirement.” Fidelity, 22 Jan. 2019, www.fidelity.com/viewpoints/retirement/income-that-can-last-lifetime.
- XOM Summary Plan Description, 2017