Santos CEO Kevin Gallagher pockets $4.7m ‘golden handshake’ bonus after flagging job cuts, profit falls

Santos boss Kevin Gallagher has pocketed a near $5 million bonus as the oil and gas producer flagged 400 job cuts with a weaker-than-expected annual profit. The Adelaide-based group’s annual report showed Mr Gallagher’s pay packet for the 2025 year was inflated to $9.1m from $5.9m in 2024 by a $4.7m payment of performance rights under a golden handcuffs agreement deal struck in 2021. Directors drew up the agreement, characterised as a “CEO growth incentive”, after now largely discounted rumours that Woodside Energy was looking at Mr Gallagher as a potential replacement for Peter Coleman, who was ultimately succeeded by Meg O’Neill. The agreement required Mr Gallagher to remain at Santos until the end of 2025 and deliver progress on “a suite of demanding milestones and initiatives” related to its Barossa LNG project in the Timor Sea, gas reserves in WA and emission reductions. The annual report disclosed the chief executive met the conditions at the end of 2025 for the vesting of 90 per cent of the 847,458 Santos performance rights on offer as part of the deal. The personal windfall came as Santos used its annual results to reveal plans to further cut costs by jettisoning 10 per cent of its 4000-strong workforce. The group also announced a strategic review of its Australian oil and gas business, which includes assets in WA, NSW, Queensland and South Australia. Mr Gallagher said that with the completion of Santos’ flagship growth projects - Barossa LNG in the Timor Sea and the Pikka oil project in Alaska - “we are targeting a head count reduction of around 10 per cent, rightsizing the business”. “Our base business has performed exceptionally well with production maintained and the best unit production costs in a decade, achieved through continued commitment to the disciplined low-cost operating model,” he said. The results showed a 33 per cent drop in Santos’ full-year profit to $US818m - below analyst expectations - with revenue off 8 per cent at $US4.9 billion as realised oil and LNG prices fell. The final dividend was held at an unfranked US10.3¢ a share. Santos chair Keith Spence said global energy markets remained “volatile, driven by persistent geopolitical tensions and a slowdown in economic growth”. However, despite short-term uncertainty, demand for coal, oil and gas continued to rise, he said. Like Woodside, Santos is betting that Asia will help underpin growth in demand for LNG, despite forecasts of a looming supply glut of the heating fuel. “Asia remains at the center of LNG demand growth, with consumption forecast to expand strongly through to 2050,” Mr Gallagher said. “Santos is well positioned with advantaged supply into the region. “It is the only scalable, dispatchable fuel capable of supporting renewables while maintaining grid stability. That makes it a foundation fuel for economies that are growing. Mr Gallagher said that with Barossa and Pikka on line, the oil and gas interests in Australia would account for just 20 per cent of group production and could struggle to compete for investment funds. “The review is to step back and say how will the opportunities around these other assets compete in that portfolio – the hurdles are going to be higher and tougher economically,” he said. “They might not stack up against the opportunities across the rest of the portfolio.”