BP Boss Faces Revolt On Pay

Oil giant BP is due to hold its annual general meeting for shareholders on Thursday with some major investors planning to vote against chief executive Bob Dudley's 20% pay rise.

Shareholders will discuss whether he should receive the rise, which comes despite job cuts and falling profits.

Those who have spoken out include Aberdeen Asset Management and Royal London Asset Management.

Glass Lewis, ShareSoc, Pirc and ISS have also advised a vote against.

The pay rise would take Mr Dudley's salary package to $19.6m (£13.8m).

Meanwhile the Institute of Directors warned that the pay increase risks sending "the wrong message to other companies".

The vote is "advisory" so even a vote against would not strictly require any change of tack from the company.

However, it could pave the way for change in the next year.

BP's pay policy is subject to a binding shareholder vote every three years.

It was last set in 2014, meaning new proposals are due to be put forward for shareholder approval again in 2017.

Tim Bush, head of governance at the investors' advisory consultancy Pirc, told the BBC's Today programme on Thursday that the "pay model is broken".

Paying chief executives on a formula devised two or three years ago was not sensible. "There is a major problem in the way chief executives are recruited and paid," he said.

But Mark Freebairn, partner at recruitment firm Odgers Berndtson, told Today: "If Bob Dudley was to leave [BP] it would be for a competitive company and remuneration would be part of the discussion. If you operate in a global market, you have to operate on a global scale."

BP was now in a far better position than when Mr Dudley took the helm, he said.

A spokesman for BP said shareholders themselves had backed the pay formula.

"Despite the very challenging environment, BP's safety and operating performance was excellent throughout 2015... BP's performance surpassed the board's expectations on almost all of the measures that determine remuneration - and the outcome therefore reflects this.

"And these clear measures derive directly from BP's remuneration policy which was approved by shareholders at the 2014 AGM with over 96% of the vote," the spokesman said.




April 2016