BP cuts CEO’s pay package after shareholder backlash
There is no doubt as to the magnitude of the task for whoever ends up running the Abu Dhabi carrier. The strategy of global alliances Hogan LONDON: British Petroleum (BP) has cut Chief Executive Bob Dudley’s 2016 pay package by 40 percent to $11.6 million, the latest British bluechip company to rein in executive pay after a wave of shareholder revolts.
The oil company has reduced Dudley’s payout and introduced changes from this year that will lower executives’ performance incentives. The cuts come after around 60 percent of shareholders opposed BP’s pay policy at last year’s annual general meeting.
Executive pay has come under growing scrutiny in Britain after a string of corporate scandals, such as the collapse of store chain BHS, which has fueled mistrust of the high levels of pay awarded to company bosses.
“We applaud the BP remuneration committee for being proactive in responding to the shareholder revolt last year and see this as a milestone in the engagement between companies and shareholders,” said Ashley Hamilton Claxton, corporate governance manager at
The other problem, Airberlin, has been ameliorated to some degree by Etihad’s deal with German airline Lufthansa and the leisure operator TUI, which reduces Etihad’s exposure. But that deal is still subject to final approval from the German authorities, and could face legal challenge from the likes of Ryanair, which sees it as an anti- competitive stitch- up by the big carriers.
Results from Airberlin toward the end of this month will be an opportunity to assess the airline’s progress, but will also likely paint a pretty black picture of its finances in 2016.
Added to those specific problems is a long list of other challenges: the US laptop ban, the simmering “open skies” row, the fiercely competitive state of the Gulf aviation market, and structural changes in the global industry, are some of the urgent issues sitting in the CEO’s inbox.
Whoever gets the Etihad job will have to be a problem solver with a constitution of steel. Royal London Asset Management.
BP’s pay policy changes, which will apply for the coming three years if approved by shareholders at the annual general meeting in London on May 17, include lowering Dudley’s maximum long-term payout to five times salary from seven times and cutting bonus payments by a quarter.
“I have consulted widely with shareholders and listened to and sought to act on their con- Frank Kane is an award-winning business journalist based in Dubai. He can be reached on Twitter @frankkanedubai cerns, and have been sensitive to developments in the society in which we work,” Ann Dowling, chair of BP’s remuneration committee, said in the company’s annual report.
Dudley’s 2016 pay cut was a result of “downward discretion” to the four components of his total pay, the company said. Even after a cut of nearly $8 million, Dudley’s pay remains well above that of rival European oil companies.
Shell’s Ben van Beurden was awarded an €8.263 million ($8.8 million) pay package for 2016, a 60 percent jump year on year, while Total’s Patrick Pouyanne took home €3.8 million last year.
BP Chief Financial Officer Brian Gilvary’s overall pay package will be cut by 18 percent to £4.2 million ($5.2 million).
Other large British companies, such as Reckitt Benckiser and GlaxoSmithKline, have also cut executives’ pay after shareholders had voiced concerns about their remuneration plans.