Maximum bonus takes Browne's pay at BP to £4.8m

Lord Browne, the chief executive of BP, reinforced his reputation as the UK's best-paid director last year with an 18 per cent increase in his total package to £4.8m.

Lord Browne, the chief executive of BP, reinforced his reputation as the UK's best-paid director last year with an 18 per cent increase in his total package to £4.8m.

The boss of Britain's biggest company and the world's second largest oil major also saw the value of his pension pot increase by £1.16m to £13.9m - enough to buy him an annual retirement income of £899,000.

Lord Browne's basic salary rose by 5 per cent to £1.31 million in 2003, according to BP's annual report and accounts. But on top of that he received an annual bonus of just under £1.9m - very nearly the maximum that BP could pay - and performance shares worth £1.5m under the company's long-term incentive plan.

Last year he also received a further grant of shares up to a potential maximum of 1.26 million which will be awarded in 2005 depending on BP's performance. This was in addition to 1.34 million share options which are currently showing a paper profit of £890,000.

Tony Hayward and John Manzoni, the two directors appointed to the board last year and seen as the internal candidates to succeed Lord Browne, received £1.05m and £1.1m, respectively, including their long-term performance bonuses.

The average pay among BP's 103,700 workers was a more modest £83,896, including pension benefits, although this did represent an increase of 30 per cent on the previous year - outstripping the pay rise for Lord Browne on a percentage basis, if nothing else.

Shell, which has been rocked by the sacking of its chairman, Sir Philip Watts, and head of exploration and production, Walter van de Vijver, publishes its annual report and accounts next week. Sir Philip earned £1.8m in 2002 including a bonus of £874,000.

BP's annual report also discloses that it had to inject $2.18bn into its US pension fund last year to cover a shortfall. A total of $258m was paid into the UK fund. This year BP said it expected aggregate contributions to reach about $400m.

BP said that as of 31 December, 2003, the value of the assets in its UK pension fund was $19.22bn - equivalent to 117 per cent of the estimated accrued benefits it is liable to pay. The company added that every 1 per cent increase in investment returns cut its exposure by $3.3bn.