BP chief rises to the top with £6.8m pay package

Lord Browne of Madingley, the chief executive of BP, became Britain's highest-paid businessman last year after his pay rose by 48 per cent to £6.8m.

The increase in pay came despite a decline in BP's profits and a deterioration in its overall financial performance against rival oil companies such as Royal Dutch Shell.

Details of Lord Browne's pay, published yesterday in the company's annual report and accounts, come at a sensitive time with oil companies under renewed attack for putting up petrol prices so rapidly in response to rising crude prices.

A BP spokesman defended the pay of its chief executive, pointing out that he still received far less than his counterparts in the US. Lee Raymond, the chief executive of Exxon-Mobil, received $28m (£19.8m) last year, for instance.

Lord Browne's base pay, including annual bonuses, rose by 58 per cent last year to £3.1m. He also received £3m in performance shares under BP's long-term incentive plan – a 19 per cent rise on the £2.6m in shares received the previous year.

Last year's pay package also included 1.27m share options which are currently showing a paper profit of about £630,000. In 2000, the profit on his 400,000 share options was about £40,000.

BP said that Lord Browne's basic pay had risen last year partly to bring it more into line with his peers. This, in turn, had affected his annual bonus, which is paid as a percentage of base pay.

A spokesman pointed out that BP's relative decline in performance last year would be reflected in the shares he is awarded this year which will be worth £2.6m compared with last year's £3m award.

BP also said that base pay this year for executive directors would be increased by less than 10 per cent "in line with similar global companies". The company added that more than three-quarters of executive pay was now performance-based compared with a half seven years ago.

BP's profits fell by 7 per cent last year to $13.18bn, mainly due to lower oil prices. However, oil prices have spiked sharply higher in the last few weeks because of heightened tensions in the Middle East and fears of a US-led attack on Iraq.

A number of major oil companies and supermarkets have raised petrol prices by 1p a litre although BP has so far said it has no plans to increase pump prices.