BP share price: Shareholders rebel against chief executive pay package

on Apr 11, 2014
Updated: Apr 9, 2020

iNVEZZ.com, Friday, April 11: Almost a third of BP Plc’s (LON:BP) shareholders refused to support the pay package of chief executive Bob Dudley at the company’s annual meeting yesterday.

The oil major also came under fire for its relationship with Russia’s Rosneft (MCX:ROSN) as well as for the Gulf of Mexico oil spill settlement.
BP’s share price has shed about 0.5 percent in London this morning.
**BP shareholders rebel over Dudley’s pay package**
BP revealed yesterday that during the company’s annual general meeting, nearly a third of the oil major’s shareholders refused to back the $8.7 million (£5.2 million) pay package of chief executive Bob Dudley. Thirteen percent voted against the executive pay report and a further 19.04 percent abstained, with the remaining 67.96 percent voting in favour. The result compares with 93 percent support a year ago.

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One large institutional shareholder told The Times that there was “quite a strong feeling that there is a disconnect between rewards and performance”.
BP’s chairman Carl-Henric Svanberg defended Dudley’s pay, insisting that high pay awards were in fact good news for investors.
“The energy industry is truly global,” Svanberg said. “We compete in a global market and BP must ensure it attracts and keeps the best people.”

The Times quoted Sarah Wilson, chief executive of proxy voting agency Manifest, as accusing the oil major of a lack of transparency over how it measured performance.
“BP has had ongoing issues over pay for some time,” she said. “High pay and not good governance over pay is the most toxic combination. It’s the perfect storm. BP has gone backwards.”

**‘Bridge’ between Russia and West**
In an attempt to appease investors, Dudley said that BP could act as a ‘bridge’ between Russia and the West. Shareholders have been concerned about how BP’s near 20 percent stake in Kremlin-backed energy giant Rosneft will be affected by the annexation of Crimea. (Shareholders to pressure BP on Russian stake and Crimea conflict)

“We have a unique position with Rosneft in Russia, a position that gives us nearly a fifth of the world’s largest publicly traded oil company operating in a country with massive reserves and massive potential,” Dudley told investors yesterday, adding that BP could “play an important role as a bridge”.
Reuters quoted two shareholders as asking Dudley what he would do if Russian President Vladimir Putin decided “to annex BP’s position in Rosneft”.
Svanberg however told investors not to over-estimate BP’s exposure to Russia with the company having comparable investments in Azerbaijan and Angola as well as in the US.

**Gulf of Mexico payouts**
Moving on to the US, shareholders also criticised BP for its 2012 Gulf of Mexico deal which has left BP vulnerable to fictitious claims. The settlement cost has spiralled above the originally estimated $7.8 billion to $9.6 billion on account of the interpretation of the settlement which has allowed claimants without actual damages to receive payouts.
“BP is a laughing stock,” private shareholder Jean Archer said, as quoted by The Times. “Everyone who could write a letter made a claim.”
Svanberg pledged that the company would “continue to counter all unfair claims for compensation”.
Last month, BP lost a bid to limit the cost of its compensation settlement. (BP share price: US court rejects BP appeal over oil spill payments) The oil major, however, has said that it is considering taking the case on further appeal.
**As of 08:07 BST, buy BP shares at 481.10p.**
**As of 08:07 BST, sell BP shares at 480.85p.**


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