BP Faces Discontent Over CEO Dudley’s 2014 Pay

There is a major outcry among investors, but most particularly two leading consultants, who specialize in advising institutional shareholders, over plans by the shareholders for British Petroleum Inc.(BP) to vote for (or against) CEO, Bob Dudley’s $12.4 million package.

Glass Lewis, and Pensions and Investment Research Consultants (PIRC), both say that the remuneration for Dudley even exceeds past European oil and gas industry peers. They justify their stance by pointing to the company’s dismal poor performance for the past five years, ever since he took over as CEO after the disastrous oil spill of the coast of Gulf of Mexico, which the company is still struggling to pay off.

Many investors have become increasingly vocal about pay increases granted to top-level executives, particularly banking giant groups in Europe and North America, as the CEO reaped in high compensation packages, even while during the financial crisis and economic downturn that swept the entire financial world by storm. It also forced lawmakers to grant more power for shareholders to block the outrageous and unjustified pay packages.

Dudley’s 2014 pay package is said to be more than 20% compared to 2013, even though salary and annual bonus fell from $4.21 million to around $2.95 million. However, deferred bonuses and performance awards rose to $9.79 million from approximately $6 million. Overall, his total remuneration sums up to $12.74 million approximately. Shareholders are expected to put to vote on whether to approve or disapprove Dudley’s salary at its annual general meeting on April 16.

BP executives are expected to receive bonus payouts worth more than 73% of the total maximum limit set by company itself. Consequently, it seems like the top management is treating itself with many benefits while turning their backs on their poor performance, barring the rout in oil prices since last summer.

A spokesman for the company though thinks differently, if not the opposite. He states that the executive pay is clearly linked to BP’s performance and the remuneration for 2014 was totally in line, especially the strategic targets that were set four years ago were more or less achieved.

It must be noted that the same consultants also voted against the 2013 remuneration package but the shareholders had other ideas and voted two thirds to support it. Also, another consultant, which is slightly biased on BP’s side, stated that it recommends investors vote in favor of the remuneration package, since the oil and gas major addressed disclosure issues.