New BP CEO Pay Revealed

BP announced recently that its board has appointed Murray Auchincloss as BP’s new Chief Executive Officer with immediate effect. In that announcement, the company also revealed what the new CEO’s remuneration arrangements will include.

Auchincloss will receive an annual salary of GBP 1.45 million ($1.83 million), as well as a cash allowance in lieu of pension equal to 20 percent of base salary, “in accordance with BP’s remuneration policy and aligned with the majority of the wider UK workforce”, BP revealed in the announcement.

The company also noted that provisions relating to bonus opportunity, bonus deferral, and performance shares are all in accordance with BP’s 2023 remuneration policy, as approved by shareholders.

Auchincloss had been interim CEO since September 2023. He will continue as a member of the BP board, the announcement highlighted.

Back on September 12, BP announced that its then CEO, Bernard Looney, had notified the company that he had resigned as CEO with immediate effect. The company noted at the time that Auchincloss would act as CEO on an interim basis.

“Mr Looney has today informed the company that he now accepts that he was not fully transparent in his previous disclosures,” BP said in its September statement.

“He did not provide details of all relationships and accepts he was obligated to make more complete disclosure,” BP added.

“The company has strong values and the board expects everyone at the company to behave in accordance with those values. All leaders in particular are expected to act as role models and to exercise good judgement in a way that earns the trust of others,” it went on to state at the time.

No Further Salary

In a statement posted on its site last month, BP revealed that Looney would receive no further salary, pension allowance, or benefits from the date of his dismissal, and that he will not be paid any annual bonus in respect of the financial year 2023.

BP also revealed in December that Looney’s unvested performance share awards under the Executive Directors’ Incentive Plan (EDIP) - for the 2021-2023, 2022-2024 and 2023-2025 performance share plans - will lapse in full and that his unvested deferred annual bonus share awards under the EDIP - from annual bonuses for 2021 and 2022 - will also lapse in full.

“In addition, reflecting the decision by the board that Mr Looney should not retain any variable pay relating to service following the date of the misleading assurances he gave to the board, discretionary clawback has also been applied,” BP said at the time.

“Mr Looney will be required to repay 50 percent of the cash portion of the annual bonus paid to him in respect of the financial year 2022 and he will forfeit 6/36ths of his award of shares that vested in August 2023 from the three-year 2020-2022 performance share plan under the EDIP,” BP added.

“The total maximum value of the potential remuneration that has been forfeited or clawed back is GBP 32,426,000 ($41.14 million) … 87 percent of this value is automatically forfeited as a result of Mr Looney’s resignation with immediate effect on 12 September 2023,” it continued.

“Ten percent results from the board’s decision that he should be dismissed following serious misconduct and the further three percent has been clawed back at the discretion of the board,” BP went on to state.

In 2022, Looney’s base salary was GBP 1.37 million ($1.73 million) and his annual bonus was GBP 2.36 million ($2.99 million), according to the company’s 2022 annual report, which revealed that Looney’s 2020-2022 performance share plan came to GBP 6.00 million ($7.60 million). Looney’s single figure outcome for 2022 was GBP 10.02 million ($12.70 million), the report showed.

Robust Seach Process

Auchincloss’ appointment was made “following a robust and competitive search process, carried out by the board over the past four months with support from international search advisers”, BP outlined in its latest announcement, adding that this included detailed consideration of a range of candidates, ”including external to BP”.  

The search process for the new CEO was led by a committee of the BP board, headed by Helge Lund together with three other non-executive directors, BP noted in the statement. The appointment decision was approved by the full BP board, excepting Auchincloss, it added.

“Since September, BP’s board has undertaken a thorough and highly competitive process to identify BP’s next CEO, considering a number of high-caliber candidates in detail,” BP Chair Helge Lund said in the announcement.

“The board is in complete agreement that Murray was the outstanding candidate and is the right leader for BP. Many already know Murray well, and few know BP better than he does,” he added.

“His assured leadership, focus on performance and delivery, and deep understanding of the opportunities and challenges in the energy transition will serve BP well as we continue our disciplined transformation to an integrated energy company,” he continued.

In the statement, Auchincloss said, “it’s an honor to lead BP – this is a great company with great people”.

“Our strategy – from international oil company to integrated energy company, or IOC to IEC – does not change. I’m convinced about the significant value we can create,” he added.

“Now, more than ever, our focus must remain on delivery – operating safely and efficiently, executing with discipline, and always focusing on returns. This is how we will deliver real benefits for our customers and other stakeholders and continue to grow long-term value for BP’s shareholders,” Auchincloss went on to state.

Before becoming interim CEO in September 2023, Auchincloss had been BP’s chief financial officer since July 2020, at which time he also joined BP’s board. Auchincloss has previously served as CFO, deputy CFO, and head of business development for BP’s upstream segment. From 2010-2013 Murray was head of BP’s group chief executive’s office, working directly with Bob Dudley. 

To contact the author, email andreas.exarheas@rigzone.com