Golden handshake boosted Lord Simon's BP pay packet to pounds 599,000
Tuesday 17 March 1998
BP's annual report and accounts show that Lord Simon received a fixed fee of pounds 326,000 for his four months employment with the company and shares worth a further pounds 273,000, paid out under BP's long-term performance plan.
Lord Simon's total pay from BP was almost six times the amount Mr Blair drew as Prime Minister and nearly 12 times the amount he was entitled to as a minister of state in the House of Lords.
Lord Simon has waived his entitlement to the pounds 51,838 salary he is allowed to draw as Minister for Trade and Competitiveness in Europe. However, he continues to receive a pension from BP.
A BP spokesman said the decision to make the ex gratia payment of pounds 240,000 to Lord Simon was not unusual. "The board decided to give him an honorarium, which is quite common when people retire from BP."
Shortly after taking up the post Lord Simon was criticised by John Redwood, the shadow trade and industry secretary, for failing to disclose his ownership of BP shares. He subsequently sold all his 275,688 shares in the company in August, included those awarded last year under the long-term performance plan.
Lord Simon took advice from the Permanent Secretary at the Department of Trade and Industry on his BP shares. He did not sell them immediately he entered government because he was in possession of price-sensitive information, but nor did he transfer them to a blind trust as other ministers have done in the past. The profit made on his BP shares between May and August was donated to charity.
The annual report also shows John Browne, BP's chief executive, took home pounds 1.76m, including pounds 821,000 awarded to him under the company's long- term performance plan. This year he stands to receive a maximum award worth pounds 815,000 under the scheme.
The 365 BP executives who are participate in the plan stand to receive shares worth pounds 22m this year. Awards under the scheme are based on growth in total shareholder return.
In the three years from 1995 to 1997 - the period over which the 1998 award will be based - BP's total shareholder return was 19.5 per cent, beating the market.
In 1996 Mr Browne's total remuneration was higher at pounds 2.46m but this included a pounds 1.72m payment under a previous five-year incentive scheme.
Mr Browne's remuneration, excluding his long-term share award, rose by 25 per cent to pounds 938,000, reflecting the bumper year enjoyed by BP.
Replacement cost profit before exceptional items rose by 13 per cent to pounds 2.822bn, return on capital employed reached 17 per cent and BP's debt ratio fell to 23 per cent - half its level four years ago.
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