BP chief ’s pay deal rejected by 60pc of f irm’s shareholders
BP has been dealt a bloody nose by investors who revolted over the £14million pay deal of chief executive Bob Dudley.
In what is being called the start of a ‘shareholder spring’, almost 60 per cent of investors voted against the fat cat pay package in protest over the record £4.6billion loss that the firm made last year.
The 60-year-old American boss of BP has also culled around 5,000 jobs in the past year.
The rebellion against BP’s board included a number of shareholders who spoke out at the firm’s annual meeting in London, yesterday.
Adam Matthews, representative for Church of England pensions, which invests in BP, said: ‘Given the context of the headline performance of BP, is this level of pay morally right?
‘It raises the question of how much one person needs to be paid to be incentivised?’
Private investor David Walker said he had stood up at a previous BP annual general meeting and defended the pay of former chief executive Lord Browne.
But he added that, in the current economic climate, Mr Dudley’s pay is inappropriate.
To applause, Mr Walker told those present: ‘That was a different time when his good stewardship brought this company from the doldrums into a highly successful company.
‘The situation in this country and much of the EU is austerity. It’s not the time to increase directors’ remuneration.’
Around 18million UK savers are estimated to own shares in BP, either directly or through a pension or investment fund.
But the firm has been plunged in to crisis by the recent steep falls in the price of oil, as well as multimillion pound fines and costs associated with the Gulf of Mexico spill in 2010.
Another private shareholder, Grace Smith told the board: ‘I know that if you choose to work in a volatile sector you accept the rough with the smooth.
‘I find it unrealistic that the oil price plays no part in the decisionmaking on pay.
‘We’re not against high pay but neither are we immune to the realities of the economy.’
The pay of Mr Dudley was put to a shareholder vote with 59 per cent voting against the deal.
This defeat is thought to be the largest revolt since June 2012 when advertising empire WPP had a 59 per cent vote against chief executive Sir Martin Sorrell’s package of £11.9million.
This marked the rise of the first ‘shareholder spring’ and directly caused an overhaul of share voting rules.
Every three years, companies must now put the pay deals of their bosses to the shareholders, who then have a binding vote to approve how remuneration is calculated.
The first such vote was held in 2014, and another one is due in 2017.
This means that the revolt against Mr Dudley’s pay is not binding, and the company is not forced to change his deal.
Despite this, BP has promised to address the situation ahead of the binding votes for a new pay policy next year.
BP chairman Carl-Henric Svanberg told shareholders: ‘We hear you.
‘We will sit down with our largest shareholders to make sure we understand their concerns.
‘We have always judged executive performance … on measures that are clearly within management’s control.
‘And, from that perspective, the board has concluded that it has been an outstanding year. The pay reflects this and it is consistent with our policy.’
BP is the first company to face a shareholder revolt this year.
Miner Anglo American, drugs giant Astra Zeneca and Nurofen maker Reckitt Benckiser are all expected to be confronted by investors at meetings over the coming weeks.
‘Accept the rough with the smooth’