BP shareholders staged a major revolt against the company yesterday as nearly a third of them failed to back the $8.7m (£5.2m) pay package of chief executive Bob Dudley and other boardroom staff.
At a bad-tempered annual general meeting in London Docklands, BP revealed that 13 per cent voted against the executive payouts and a further 19.04 per cent abstained. This meant 32.04 per cent failed to back the pay deal, primarily in retaliation at the tripling of Mr Dudley's total compensation last year despite a 22 per cent drop in profits. Just 67.96 per cent voted in favour.
During the meeting, BP chairman Carl-Henric Svanberg insisted that the high pay awards were actually good news for investors.
"The energy industry is truly global. We compete in a global market and BP must ensure it attracts and keeps the best people," he told the audience at the ExCel Centre.
"Rewards are not just based on financial performance – they also reflect progress on safety, reputation and operations. In other words, if our executives are being well rewarded that's good news for every shareholder in this room," Mr Svanberg added.
BP also came under fire for forging such a close relationship with Rosneft, the Russian state-owned oil producer. The group owns 20 per cent of Rosneft after accepting shares in the Russian oil giant as part payment for its stake in the TNK-BP joint venture last year.
"If something should turn foul, should Putin and his comrades get on the wrong side of the UK and its allies, what is the risk of them nationalising the operations of BP?," asked shareholder Robert Barrett.
Mr Dudley defended BP's relationship with Rosneft, vowing to remain in Russia despite the Ukraine crisis and arguing that the company could play a crucial role between the West and Moscow.
"Clearly the situation in Ukraine is currently the focus of world attention. We'll seek to pursue our business activities, mindful that the mutual dependence between Russia, as an energy supplier, and Europe, as an energy customer has been an important source of security and engagement for both parties for many decades," he said.
"I think we can play an important role and a bridge," said Mr Dudley, adding: "None of us knows what can happen in the Ukraine, it is a very complicated country and always has been."
Mike Everett, of major shareholder Standard Life, cast doubt on BP's ability to influence the behaviour of Russia.
"This assessment is difficult, but we are a little uncertain about that influence," he said.
Mr Svanberg conceded that the problem in Russia was worrying, but sought to allay fears by insisting it was in everybody's interest to keep business going.
"It is a troublesome situation and we're following it very closely. For Russia, we feel they are very keen on keeping all the business relationships," he said.