BP could be facing a rocky annual meeting after shareholder advisory group Pirc urged investors to oppose its latest remuneration report.
Pirc said the bonus of £540,000 proposed for the oil giant’s chief executive, Bob Dudley, equivalent to 50% of his £1.1million base salary for 2011, was hard to justify after a difficult year and in the absence of details of the targets used to test performance.
Pirc said it was also unhappy about there being no “quantitative measures” to judge the achievements of directors in areas of safety linked to their bonuses.
It added: “This makes it difficult to assess whether the previously set targets were challenging, especially considering that the executives outperformed in a lot of areas.”
In addition, Pirc said it was not clear if BP’s executive directors’ incentive plan used the same safety-performance measures as its annual bonus scheme.
And since safety-performance targets were not disclosed it was impossible to assess whether they were sufficiently challenging, it added. Pirc said: “The remuneration structure has the potential to pay excessive variable remuneration and we note that, during the year under review, this was the case.”
As an example, the group highlighted Mr Dudley receiving 550% of his salary in shares linked to the company’s long-term performance, but this was dismissed by BP as factually incorrect.
A spokesman for the oil firm said the 550% was the maximum the CEO could potentially receive in 2015 if the company outperformed its peers in each one of a set of competition measures.
The number of shares awarded to Mr Dudley and the other directors this year was worth only 16% of salary and based on the firm’s performance over the 2009-11 period, he said, adding the average over the past five years was less than 10%.
BP’s spokesman said the remuneration policy was closely aligned to the long-term interests of the company and its shareholders, and directly linked to strategic performance.
Pirc also complained that BP’s dividend payments were not being put forward for shareholder approval.
In February, BP posted pre-tax profits of £25.2billion for 2011 after losses of £2.3billion in 2010.
Revenue was £238billion, an increase from £188billion in 2010.
The company’s AGM takes place in London on Thursday, April 12.
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