SHAREHOLDERS in oil giant BP have rejected the company board’s plan for a pay deal of £13.8 million for chief executive Bob Dudley.
Almost 60 per cent of shareholders rejected the renumeration report, which allowed Mr Dudley’s pay package to rise by 20 per cent on the previous year, despite the group posting its largest annual loss for 20 years and axing thousands of jobs worldwide. The vote against the pay deal is only advisory as shareholders have no power to veto it and Mr Dudley has already been paid.
But the large percentage of those voting against it showed the depth of shareholder displeasure.
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Just 40.89 per cent of BP shareholders voted to approve the package, while 59.11 per cent voted against it. Chairman Carl-Henric Svanberg told the company’s annual general meeting in London that Mr Dudley and his team had put in a “seriously impressive performance”, particularly against a backdrop of falling oil prices in a volatile and fragile market.
But he faced difficult questions from shareholders, including one from a representative of the Church of England about the morality of rising pay, and from others about whether they were suitable in times of austerity.
BP has promised to review its remuneration policy ahead of next year’s meeting, with new proposals due to be put forward for shareholder approval in 2017.
Professor Dame Ann Dowling, a non-executive director of BP, said she would personally engage with some of the major shareholders when carrying out the review.
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She said: “We are going to review the remuneration policy to see how we can simplify it while retaining a strong link to long-term performance.
“We will certainly review the measures and criteria that we use to judge performance, including how in the future we deal with changes in oil price and also the link to shareholder value.”
One shareholder, Bill Parker, questioned why Mr Dudley was paid a bonus for safety when it should be “inculcated in his job”.
Dame Ann defended safety being part of the company’s pay scheme, saying it is BP’s “number one” element of strategy and that it “concentrates everybody’s minds on just how important it is”.
The pay hike for Mr Dudley came in a year when BP slumped into the red by £3.6 billion following a collapse in oil prices.