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| BP boss Dudley faces shareholder action over £14m pay | |
| (about 3 hours later) | |
| BP holds its annual shareholders' meeting on Thursday with some investors planning to vote against chief executive Bob Dudley's 20% pay rise. | |
| Shareholders in the oil giant are concerned that rises for Mr Dudley and other executives come despite job cuts and falling profits. | |
| Those who have spoken out include Aberdeen Asset Management and Royal London Asset Management. | Those who have spoken out include Aberdeen Asset Management and Royal London Asset Management. |
| But BP said the firm's performance beat most measures that determine pay. | |
| The pay rise for Mr Dudley takes his salary package to £14m. | |
| Shareholder group Sharesoc branded the pay deal "simply too high", while Glass Lewis, ShareSoc, Pirc and Institutional Shareholder Services have also expressed their opposition. | |
| Ashley Hamilton Claxton, corporate governance manager at Royal London, told the BBC: "The executives received the maximum bonuses possible in a year when [BP] made a record loss, and to us that just does not translate into very good decision-making by the board. | |
| "We think it sends the wrong message. It shows that the board is out of touch." | |
| Change | Change |
| Meanwhile, the Institute of Directors warned on Wednesday that the pay increase risked sending "the wrong message to other companies". | |
| IoD director-general Simon Walker said the "pay package will seem unjustified to many shareholders, considering the performance of the company over the past 12 months". Last year, BP made a £3.6bn loss and announced that thousands more jobs would be cut. | |
| The vote on BP's remuneration report is "advisory", so even a vote against would not strictly require any change of tack from the company. | |
| However, Ms Hamilton Claxton told the BBC's Today programme that 20%-25% of shareholders might vote down the pay deal, which would force BP to "think long and hard about their decision". | |
| BP's pay policy is subject to a binding shareholder vote every three years. | 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. | 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". | 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. | 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. |
| 'Surpassed expectations' | |
| 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." | 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. | 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. | 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. | "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. | "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. |
| Analysis: Simon Jack, BBC business editor | |
| Giving someone a 20% pay rise for a year's work that saw BP record its biggest ever operating loss seems perverse even by chief executive pay standards. | |
| If it's any consolation, (I doubt it will be), bosses at Exxon and Chevron got paid even more than Bob Dudley even though the value of their companies fell by more than BP. That's the bit that sticks in the craw for many. Under what circumstances don't these guys get paid a fortune? It would be fine if some years you win, some years you lose - but they never seem to lose. | |
| We may get a rebellion of 20-30% of shareholders today but even if it was more than 50%, the board doesn't have to listen. Shareholders do have a binding every vote every three years on the pay policy and formula. No use crying now, the formula that spat out £14m for Bob Dudley was approved in 2014 by 96% of shareholders. | |
| Read Simon's full blog here. |