BP has defended a huge increase in the amount it paid CEO Bob Dudley in the face of anger among many investors.
Shareholders voting at BP’s annual meeting Thursday are angry that Dudley took home $19.6 million in pay and benefits in 2015, up 20% over the previous year.
The bumper payout came despite an annual loss of $5.2 billion, a collapse in the group’s share price, and plans to shed 7,000 jobs by the end of 2017.
“We consider the pay of the CEO to be simply too high, and particularly so in a year when the company suffered a record loss,” said small shareholder group ShareSoc.
Aberdeen Asset Management, a top 10 BP shareholder, was also reported to be unhappy.
The package was even questioned by a group of top British executives — the Institute of Directors. “We are concerned … that Mr Dudley’s … pay package will seem unjustified to many shareholders,” the group’s chief said.
Much of BP’s loss was due to costs from the fallout from the 2010 Gulf of Mexico disaster, but the steep fall in oil and gas prices played a big part too.
Thursday’s shareholder vote is not binding on BP’s board — investors only get a real say on executive pay once every three years — but a substantial rebellion would be embarrassing for the company.
Opening the meeting, BP Chairman Carl-Henric Svanberg said executive performance was judged on measures within management’s control, and on that basis BP had an “outstanding year.” He cited a “very strong” operational performance, rapid and resolute response to the oil price slump, and the settlement of all outstanding claims relating to the 2010 disaster.
But he acknowledged the strength of feeling among institutional investors over Dudley’s pay.
“They are seeking change in the way we should approach this in the future… let me be clear. We hear you.”