BP PLC shareholders, including large pension funds, fired a “shot across our bow” and rejected by a vote of 59.3% a ratification of pay of the company's CEO and other top executives in proxy voting Thursday at its annual general meeting, said David Nicholas, head of group press office.
Voting against the BP directors' remuneration report are the $290.7 billion California Public Employees' Retirement System, Sacramento; $178.7 billion California State Teachers' Retirement System, West Sacramento; C$282.6 billion ($217.1 billion) Canada Pension Plan Investment Board, Toronto; $175 billion Florida State Board of Administration, Tallahassee; C$171.4 billion Ontario Teachers' Pension Plan, Toronto; and $126.6 billion Texas Teacher Retirement System, Austin, according to their proxy-voting disclosures.
The vote “was advisory on the remuneration report for last year,” Mr. Nicholas said. “That pay was paid last year.”
Bob Dudley, group chief executive and director, last year received a 20% increase in total compensation to $19.6 million, including $6.5 million in pension and retirement savings contributions, from 2014 when he received $16.4 million, including $3 million in pension and retirement savings, according to BP's annual report.
BP directors won't revise at this time the pay of Mr. Dudley as a result of the vote, but will engage in shareholder discussions about future pay policies, Mr. Nicholas said.
The vote “is a very clear message from shareholders” to BP directors to take action in reviewing the pay, Mr. Nicholas said.
“The vote has been a shot across our bow and supercharges our discussion with shareholders“ about reviewing the pay package, Mr. Nicholas said.
“We will engage shareholders about what aspects in our policy need review” to address their concerns, while taking into account needs for rewards and pay targets, Mr. Nicholas said.
BP will have two pay votes next year, Mr. Nicolas said. One is another advisory vote on the remuneration report. The other vote, on remuneration policy, is binding on the company, requiring more than 50% of the vote for adoption. The binding vote, which was already scheduled, is required under U.K. law at least every three years. If a majority of shareholder votes reject ratification of the remuneration policy, BP cannot put it into effect until a new policy wins a majority vote at another general meeting, Mr. Nicholas said.
In 2014, the first time it came to a vote, BP shareholders approved the company's remuneration policy by a 96.5% vote, Mr. Nicholas said.
Carl-Henric Svanberg, BP chairman, said at the meeting Thursday: “We know already from the proxies received and conversations with our institutional investors that there is real concern over the directors' pay in this challenging year for our shareholders,” according to a company transcript. “We have always judged executive performance not on the price of oil or bottom line profit but on measures that are clearly within management's control. And from that perspective, the board has concluded that it has been an outstanding year. The pay reflects this and it is consistent with our policy.”
For the year ended Dec. 31, BP reported a $6.5 billion loss, compared with a $3.8 billion profit in 2014.
