Top Oil Trader Vitol Paid $1.12 Billion to Shareholders in 2016

(Bloomberg) -- Vitol Group paid $1.12 billion to top executives and staff through share buybacks in 2016, one of the highest ever payouts by the world’s biggest independent oil trader.

The buybacks -- Vitol’s principle way of rewarding about 350 top employees who are also shareholders -- came as the company confirmed net income of $2.08 billion for the year, the third-best result in its history, according to regulatory filings.

While energy-rich nations suffered from the crude rout in 2016, traders such as Vitol benefited from market volatility and opportunities to lock in profits by storing oil and selling futures contracts for delivery at higher prices. The payment -- made on top of salaries and bonuses -- was the third highest in the nine years through 2016. Vitol shareholders were awarded payouts totaling about $7.5 billion over that period, the filings show.

In addition to the share redemption, the trading house paid $610 million in wages, salaries, indemnities and bonuses in 2016, according to the accounts of Vitol Holding II SA, a Luxembourg entity that’s the holding company for the group.

Despite the share redemption, shareholders’ equity increased to $10.5 billion at the end 2016, from $9.6 billion a year earlier, the company’s directors said in a report dated Aug. 14, 2017. That report described 2016 as “a very good year for the group.”

“On the basis of actual realized results up to the end of June 2017, we expect to achieve a reasonable year in 2017," according to the directors’ report.

The documents also show Vitol’s board of directors’ remuneration increased 27 percent to $33 million in 2016. Vitol’s board includes Chief Executive Officer Ian Taylor, Switzerland Managing Director Gerard Delsad, Head of Asia Kho Hui Meng, U.S. trading head Mike Loya and Russell Hardy, CEO for Europe, the Middle East and Africa.

Vitol, which is formally incorporated in Rotterdam but has its main operations in Geneva, London, Singapore and Houston, has experienced strong growth over the last two decades on the back of expanding oil trade, large price swings and, more recently, investment in storage and refining. The company reported net income of just $60 million 20 years ago.

To contact the reporters on this story: Jack Farchy in London at jfarchy@bloomberg.net, Javier Blas in London at jblas3@bloomberg.net, Andy Hoffman in Geneva at ahoffman31@bloomberg.net.

To contact the editors responsible for this story: Will Kennedy at wkennedy3@bloomberg.net, Dylan Griffiths, Amanda Jordan

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