BP Shareholder to Oppose `Insensitive' Pay Increase for CEO

  • Explorer reported record net loss last year as oil slumped
  • Dudley's pay was $19.6 million, 20% more than previous year

Royal London Asset Management Ltd. will vote against a 20 percent pay increase for BP Plc’s Chief Executive Officer Bob Dudley, calling it “unreasonable and insensitive” at a time oil’s crash has driven down the company’s earnings. 

“In a year in which BP has reported its worst-ever annual loss, it has decided to sharply boost Mr. Dudley’s remuneration. We will be voting against this proposal,” Ashley Hamilton Claxton, corporate governance manager at Royal London Asset Management, said in an e-mailed statement. “While we acknowledge BP has had to weather a turbulent period for oil markets, we strongly believe that executive remuneration should remain tied to performance.”

Dudley’s total pay, including salary, bonus, shares and pension, increased to $19.6 million in 2015, 20 percent higher than the previous year, according to BP’s annual report. While his salary rose 1.5 percent to $1.85 million, Dudley earned a 38 percent higher bonus, at $1.39 million, and the contribution to his pension and retirement benefits more than doubled to $6.52 million, according to the report. 

BP reported a record net loss of $6.5 billion last year amid oil’s biggest slump in a generation and after taking a $10 billion provision for the legal settlement relating to the Gulf of Mexico oil spill. Adjusted for one-time items, the company reported a 51% decline in profit to $5.9 billion.

Surpassing Expectations

BP said the measures that determine the CEO’s pay were backed by 96 percent of shareholders when they approved the company’s remuneration policy in 2014.

“BP’s performance surpassed the board’s expectations on almost all of the measures that determine remuneration -- and the outcome reflects this,” a spokesman for the company said in an e-mailed statement. Investors are next scheduled to vote on remuneration policy in 2017, he said.

Royal London Asset Management said it holds 0.7 percent of BP’s shares.

Pensions & Investment Research Consultants Ltd., which advises investors, recommended BP’s holders oppose the CEO pay at the April 14 annual general meeting, saying the long-term incentive is “highly excessive,” according to an April 5 report.

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