Vitol pays $2.2b payout to its traders

Bloomberg

Vitol Group paid a record $2.2 billion to its executives and staff through share buybacks last year, an unusually large payout that comes as the oil trader undergoes a generational transition in leadership.
The buyback — Vitol’s main way of rewarding about 350 top employees who own the privately-held company — means the trading house has distributed
a total of more than $14 billion in the past 15 years
to its partners, according to the company’s audited annual accounts, seen by Bloomberg News.
The figure highlights how the riches of the commodities trading industry have accrued to a small cadre of senior executives who have surfed the ups and downs of the energy markets over the past two decades. Led by Chief Executive Officer Russell Hardy, Vitol is the world’s largest independent oil trading house.
If it was divided equally, the 2019 payout would be equivalent to more than $6 million per partner, an amount that compares favorably with compensation at leading investment banks. But in contrast to the titans of Wall Street, Vitol remains privately owned.
Vitol has enjoyed strong profits in recent years, a trend that held in 2019 when net income matched the $2.3 billion record set in 2009, according to the accounts. The company earlier this year said that it benefited from higher trading volumes and “relative tightness” in the oil market in 2019, which allowed for fatter margins. Across the industry, other trading houses also reported strong profits in 2019.
Each day, Vitol moves
8 million barrels of crude and petroleum products — enough to meet the demand of Germany, France, Italy, Spain and the UK combined. The company, which operates from offices in London but is ultimately controlled through a holding company in Luxembourg, doesn’t announce its results publicly, but shares them with bankers and others.
A Vitol spokesperson declined to comment.
Last year’s share buyback was unusually large for Vitol, which historically has paid its partners an amount smaller than the previous year’s net income, allowing the company to build its
equity base. But the $2.2 billion it handed to shareholders in 2019 far exceeded the $1.7 billion it made in 2018.
The larger-than-normal payout came at the same time as several of Vitol’s senior partners were making way for a new generation.