April 10, 2013 6:46 pm

Investors to protest over BP chiefs’ pay

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Trouble is brewing ahead of BP’s annual shareholder meeting Thursday, with some investors planning to ­protest over the level of executive pay and the performance of chairman Carl-Henric Svanberg.

Three of BP’s biggest investors said they would abstain from key votes on the company’s remuneration report and the re-election of Mr Svanberg and Antony Burgmans, chairman of the remuneration committee.

These investors said they had concerns about Mr Svanberg’s decision to take up the chairmanship of Volvo, and, more broadly, about his stewardship of BP since the 2010 Deepwater Horizon disaster.

However, with the protest taking the form of abstentions rather than outright “nos”, the votes are widely expected to go BP’s way.

One investor described the planned actions as a “yellow” rather than “red” card for the company.

BP has worked hard to rebuild investor confidence since the 2010 disaster, when the Deepwater Horizon rig exploded in the Gulf of Mexico, killing 11 men and triggering the worst offshore oil spill in US history.

Last month, it said it would spend $8bn of the proceeds from the sale of its Russian joint venture TNK-BP on a share buyback, a move that was warmly welcomed by shareholders.

But questions persist over its future, especially regarding the ultimate bill for the Gulf accident. A trial in New Orleans to determine liability for civil damages and penalties is expected to drag on for months.

Meanwhile, BP’s share price remains 30 per cent lower than it was before the spill.

Bob Dudley, chief executive, saw a 21.5 per cent drop in his pay last year, after the board decided not to vest any performance shares under his long-term incentive plan.

But he still collected a cash bonus of $837,000 – slightly higher than in 2011. That has angered some shareholders.

“One could argue that a greater proportion of bonuses should be deferred until the legal case is resolved,” said Ivor Pether, senior fund manager at Royal London Asset Management.

A top 20 shareholder added: “We have a number of issues on the architecture of the pay structure, the suboptimal performance of the chairman over the problems in the Gulf and the fact he is chairman of two big groups [BP and Volvo] among many other factors.”

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