More than half of BP’s shareholders backed 2008 pay packages at the company’s annual meeting, reports the Financial Time, which included pay raises for non executive directors.
Some 62 percent of shareholders who voted approved last year’s remuneration package for executive and non-executive directors. If those who abstained from voting are included, support only reached 56 percent.
“If you mention executive pay, people just say ‘no’ at the moment,” Jonathan Rigby, UBS energy analyst, told the FT. “I don’t think the executives have done very much wrong to attract the ire of shareholders, unless there’s some intricate sense of dissatisfaction around corporate governance.”
Salaries for BP directors have been frozen, at the request of the chairman and CEO. BP’s 2008 remuneration package included a 16 percent rise in basic salary and bonus for Tony Hayward, CEO, to £2.5 million. Peter Sutherland, chairman of the company, received a raise in basic salary to £600,000.
BP’s remuneration committee also voted to give executive directors access to 15 percent of shares awarded under a three-year “incentive plan” share scheme. However, under the plan’s guidelines, which compares BP’s total shareholder return over the period to the performance of peer companies, no shares should have been allocated.
“The total shareholder return result, by itself, was not a fair reflection of BP’s relative underlying performance over the period,” the committee wrote of its decision to award the shares. All non-executive directors received pay raises, including Sir Tom McKillop, former chairman of Royal Bank.
“What is breathtaking,” one shareholder said, “is that [Sir Tom], with the full support of the board, was actually planning to stand for re-election. This is a damning indictment of corporate governance. There should be no rewards for failure and Sir Tom McKillop led RBS to a catastrophic, disastrous failure.” The shareholder’s comments induced a round of applause.
Sutherland defended McKillop’s pay increase, saying, “His performance here was first class.”