Investor adviser calls on BP shareholders to reject remuneration report

British shareholder advisory group ShareSoc said on Monday that it will recommend its members vote against oil giant BP’s remuneration report at the upcoming annual general meeting.

In March, the company revealed in its annual financial report that chief executive Bob Dudley’s pay package rose 20% in 2015 to $19.6m (£13.9m), even though BP reported its worst annual loss in 20 years as oil prices slid.

ShareSoc said: “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 of $6.4 billion in 2015. Even so his pay went up by 20%. Part of the reason for the high pay was the excessively complex remuneration scheme.”

ShareSoc said it disagreed with the remuneration chair’s statement that the company’s pay structure was “relatively simple".

ShareSoc’s spokesman on remuneration issues, Cliff Weight, said: “If you want to be simple, then it would be much better to say that the maximum bonus is 375% of salary, of which 20% is paid in cash, 40% is paid in deferred shares with no performance conditions (other than clawback) and a further 40% is subject to satisfactory safety and environmental sustainability performance.

“The BP explanation of 225% of salary maximum bonus, deferred bonus, discretionary deferred bonus and potential matching payments is confusing and adds complexity, in my view.”

Weight said making bonus pensionable for the CEO adds enormous complexity.

“The problem with making bonus pensionable is that it creates far too large an incentive for short- term performance. These issues have been well debated in the UK and it is now considered (and has been for many years) that best practice is that bonus is not pensionable.”

At 0816 BST, BP shares were down 0.5% to 348.65p.