BP plc’s shareholders are seeking a change to the way the company deals with the remuneration of its directors, following the chief executive’s proposed 20 percent pay increase this year.
“We know already from the proxies received and conversations with our institutional investors that there is real concern over the directors’ pay in this challenging year for our shareholders,” said BP’s Chairman Carl-Henric Svanberg at the company’s 2016 annual general meeting.
“We have always judged executive performance not on the price of oil or bottom line profit but 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,” he added.
“All investors we have spoken to recognize the significant operational achievements and the major role that Bob [Dudley, BP Group chief executive] and Brian [Gilvary, BP chief financial officer] have played in achieving BP’s transformation. Yet, on remuneration, the shareholder’s reactions are very strong. They are seeking change in the way we should approach this in the future. Ann Dowling, the chair of our remuneration committee, will speak about this when we get to that item. But let me be clear. We hear you. We will sit down with our largest shareholders to make sure we understand their concerns and return to seek your support for a renewed policy,” said Svanberg.
In his AGM statement made Thursday, which was sent to Rigzone, BP’s Chief Executive Bob Dudley said:
“We’re constantly looking to adapt and evolve by building on everything we have learned along the way. Right now, I believe we are generating real momentum in a very challenging environment. We have been through such challenges before - and we will come out stronger. Our current projects and programs are delivering well, increasingly well. We have a great set of new projects coming through and we also have a great set of options for the future. So, while conditions are tough today, we are well placed to go on delivering energy for decades to come – and to deliver value to…our shareholders.”
Chief Executive Bob Dudley is scheduled to receive a $19.6 million compensation package for 2015, following the loss of over 5,000 jobs losses at the oil and gas company.
On Monday this week, British shareholder advisory group ShareSoc recommended that its members vote against the oil major's remuneration report. Last week, Royal London Asset Management branded the proposed increase in Dudley's pay as "unreasonable and insensitive", according to Reuters, and said it would against the report. Reuters also revealed that Institutional Shareholder Services and Glass Lewis have recommended that BP shareholders reject the remuneration packages, which they say are over-generous.
Reuters Contributed to this article
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