BP has awarded its top directors share bonuses worth hundreds of thousands of pounds under a long-term incentive plan as the UK oil group prepares to go to trial in the US over the Gulf of Mexico disaster in less than a fortnight.
The group announced on Thursday that three directors, including Bob Dudley, chief executive, had been vested shares under the company’s three-year plan that ended in 2011 despite failing to meet the majority of the performance measures.
However, the remuneration committee decided that only one-sixth, or 16.7 per cent, of the potential shares awarded at the start of 2009 should vest based on the group’s performance relative to its peers according to certain criteria. BP came top in terms of profitability of its refining and marketing operations and therefore all shares for that criterion vested, but no shares vested for other criteria, including total shareholder return.
Mr Dudley saw 16,956 American Depositary Shares vest, equivalent to 101,736 ordinary shares. After tax and expenses of the sale, Mr Dudley retains 49,356 shares – worth about £240,857 at current share prices.
Iain Conn, BP’s head of refining and marketing who has been on the board longer, retains 71,488 ordinary shares, worth £348,861 at current prices. The shares have to be retained for a further three years before they can be sold.
BP declined to comment on whether Tony Hayward, Mr Dudley’s predecessor who was eligible to participate in the scheme even though he left before it ended, had been awarded any shares. Mr Hayward was eligible for an award of up to 755,512 shares. One-sixth of that would reduce the amount to about 125,000 shares – worth more than £600,000 at current prices.
The company’s remuneration committee last year used its discretion to decide against awarding shares to any executive director for the preceding three-year period in light of the Gulf of Mexico accident. Some directors, including Mr Hayward, also forfeited bonuses.
Nevertheless, the awards come at a sensitive time for the oil group as it prepares to go to trial. One UK-based shareholder said he was surprised at the decision over the 2009-11 plan.
“Given the fact that the company has failed on virtually all of the measures you might have thought that discretion in a downwards direction might have been applied,” he said, adding that “these are not just mechanical processes”.
BP defended the decision, noting that it was “based on very clear criteria set out in our annual report and reflects the group’s performance over the period”. The company will disclose its decision on whether to award annual bonuses for 2011 in its annual report which is due next month.
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