BP’s decision to slash its chief executive’s represents a “milestone” for shareholder engagement, says Royal London Asset Management.
The oil giant faced shareholder revolt in 2016 when 60 per cent of shareholders voted against Bob Dudley’s £14m pay packet.
But in 2016 Dudley’s total pay for 2016 fell to $11.6m with the BP remuneration committee using its discretion to stop him from earning his total entitlement, which was $13.8m.
BP has also limited Dudley’s bonus to 725 per cent of his basic salary, $1.85m, compared to 925 per cent previously. This reduces his maximum possible pay by $3.7m.
Ashley Hamilton Claxton, corporate governance manager at RLAM, says it is rare for a company to consult with shareholders on proposals for reducing pay and says it sets an example for other companies holding binding votes this year.
“We applaud the BP remuneration committee for being proactive in responding to the shareholder revolt last year and see this as a milestone in the engagement between companies and shareholders.
“In particular, the committee applied discretion to override the formulaic outcome of the pay policy, which is a welcome step in the right direction.”
RLAM holds 0.74 per cent of BP shares worth £679m.