Investors force BP into pay cut
BP YESTERDAY avoided another shareholder rebellion as investors backed a less generous pay package for chief executive Bob Dudley.
The oil giant won 97 per cent support both for Dudley’s $11.6million (£8.9million) package and a new remuneration policy that will lower performance incentives. His pay was reduced by 40 per cent from the previous year after nearly 60 per cent of investors voted against his $19.4million deal, an increase of 20 per cent that was awarded despite record losses and thousands of job cuts amid a slump in oil prices. The pay policy changes include cutting bonus payments by a quarter and lowering Dudley’s maximum long-term payout to five times salary from seven times. BP said it would reduce his maximum potential earnings by $3.7million in future and make achieving the full payout “significantly more challenging”.
BP chairman, Carl-Henric Svanberg, said: “Last year, you, our shareholders, sent us a very clear message on how we approached paying our executive directors. We said we would listen and come back with a renewed policy for remuneration. I believe that our approach is appropriate, that it is responsive and that it is balanced.”
Dudley, pictured, said BP was “firing on all cylinders” across the business, pointing to growth in its exploration, marketing and refining, alternative energy and trading operations. He said: “Our core businesses are running safely, smoothly and reliably. We have carefully thought-out plans in place to adapt to a changing future and to do so at pace.” BP nearly trebled its first-quarter profit to $1.51billion on the back of higher oil prices. It has been cutting costs aggressively, but also increased production, which will peak over the next two decades and prices would remain under pressure.
Svanberg added: “Change is happening, and at an accelerating pace in the energy world. As a company, we can be more agile and need to be ready to adapt. We are increasing our investment in gas and will grow our renewables business. We have set a clear course for BP over the next five years.”
Ashley Hamilton Claxton, corporate governance manager at BP investor Royal London Asset Management, said: “BP has made the right decision to reduce significantly the total pay that Mr Dudley will be awarded, responding to last year’s shareholder revolt.”