BP Chief Faced 40% Pay Cut in 2016

Oil and petrochemicals giant BP has revealed that it cut the annual salary of CEO Bob Dudley by 40% in 2016, from $19 million to $11.6 million, and reduced the maximum amount the executive can earn in future by $3.7million to $15.3 million. The changes are outlined in a new remuneration policy that will be put to a binding vote at the upcoming annual general meeting on May 17.

Criticism of BP executives’ high salaries reportedly reached a zenith at the 2016 meeting as shareholders were outraged over Dudley’s receiving a 20% pay raise in 2015, despite the group’s reporting a record annual loss for that year. Altogether, dissatisfaction had been rising as BP’s earnings continued to tank after the disastrous Deepwater Horizon explosion and costly oil spill on the US Gulf Coast in 2011.

Nearly 60% of proxy votes cast at the 2016 BP shareholders meeting are said to have been against Dudley’s salary award. Over the past several months, the group’s remuneration committee has been working toward what it called a “simpler, transparent and strategic focus” for determining chief executives’ pay and long-term incentives. The business newspaper Financial Times (FT) said the oil group now hopes its gradually improving financial performance will appease critics.

In 2016, underlying losses at BP shrank to $2.6 billion from $5.9 billion in 2015. The group returned to profit in the second half of last year as oil prices began to stabilize after a two-year downturn. Analysts told the FT they believed most shareholders will find the changes in the group’s remuneration policy satisfactory, although one said it was “too soon to declare that commonsense and restraint have been permanently established.”