PIRC and the ABI, two of Britain’s most influential shareholder groups, yesterday sounded the alarm over executive pay at oil major BP, raising the prospect of another embarrassing showdown with shareholders.
Investors and industry groups have become increasingly vocal in their opposition to big pay deals for executives since the global financial crisis began. BP, Europe’s largest oil company by production, saw more than a third of its investors vote against its executive pay plan in 2009.
In March BP’s annual report showed chief executive Tony Haywood had a 41 per cent rise in total pay in 2009, even though profits at the company dropped by 45 per cent.
“Pirc considers that combined remuneration was excessive in the year under review (2009) and is also concerned regarding the lack of transparency surrounding the performance conditions attached to the Executive Directors Incentive Plan (EDIP),” Pirc said.
The governance body also said the fact that BP’s remuneration committee can override the results of one quantified performance condition in the EDIP was contrary to best practice.
The ABI posted an “amber alert” on BP, urging investors to “make a careful, considered judgement” on the remuneration committee’s decision.
Rival Royal Dutch Shell said in February it would overhaul pay practices after a shareholder revolt.
City A.M. Reporter