BP chairman defends Bob Dudley's pay package

 

BP chairman Carl-Henric Svanberg has thrown his support behind chief executive Bob Dudley, insisting the tripling of his pay package last year “was good news for every shareholder”.

Addressing investors at the annual meeting, Svanberg said Dudley’s $8.7 million (£5.2 million) payout was fully justified, even though it came in a year that saw BP’s profits dive by 22%.

“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 in the Docklands.

“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,” he added.

Standard Life — one of the City’s most influential fund managers, which voted against the remuneration report last year — said it was supporting the pay resolutions. However, its governance and stewardship director Mike Everett warned that while “there have been some improvements... the journey is not yet complete”.

Svanberg’s comments began a rocky meeting in which BP also faced criticism over its tie-up with Russia’s Rosneft. Shareholders are angry over the acceptance of a near-20% stake in Russian state-owned oil giant Rosneft as part-payment for BP’s stake in the TNK-BP joint venture. Although the deal makes financial sense, its close ties with President Putin is making investors nervous.

Louise Rouse of campaigning group ShareAction said: “It’s quite clear that the behaviour of Russia is unpredictable… How can you ensure Putin doesn’t annex BP’s share in Rosneft and threaten BP’s operation in Russia?”

Svanberg said: “It is a troublesome situation and we are following it very closely. We are in constant contact with political leaders around the world.”

Dudley agreed it was difficult to predict what will happen in Ukraine but insisted that BP was in no danger from Russia. “We feel Russia is very keen on keeping its business relationships,” he said.

Referring to fears that Russia might turn off the gas tap to Europe, Dudley said: “Neither  side can or will turn this off — it would be a significant problem  for everyone.”

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