Two investment consulting firms are advising BP stockholders to vote against CEO Bob Dudley’s $12.7 million pay package for 2014, arguing the package is not in line with the company’s performance.
Glass Lewis and Pensions & Investment Research Consultants (PIRC), who offer advisement services to institutional investors along with proxy vote recommendations, told investors that Dudley’s 2014 pay package is too large, Reuters said.
Both firms said the remuneration package is higher than those given to Dudley’s European peers and does not reflect the company’s performance.
BP CEO Bob Dudley saw his pay package rise 25 percent last year despite his annual cash bonus being cut by over 50 percent.
Dudley banked $12.7 million in total pay with the bulk of the money coming from a $9.8 million performance share award, BP said in a regulatory filing released earlier this month.
He was also awarded a 2011 deferred bonus tied to safety and environmental goals achieved during the last two years.
However, Dudley saw his salary, bonus and benefits slide to $2.9 million in 2014 from $4.2 million the previous year.
Glass Lewis said that Dudley’s pay is higher than the median CEO pay package at competing European firms even though “the company performed worse than the peers.”
PIRC echoed the critique and said “changes in CEO pay over the last five years are not considered in line with the company’s financial performance over the same period.”
BP defended its executive pay packages, saying that they are in line with performance.
“Remuneration for 2014 was entirely in line with this policy and reflected the delivery of BP’s strategic targets over the past three years,” a BP spokesperson told Reuters.
Earlier this year BP slashed its 2015 capital expenditure budget by 20 percent after posting a $4.4 billion net loss for the fourth quarter of 2014 tied to low oil prices.
The company booked a $3.78 billion net profit for 2014, down significantly from $23.45 billion in 2013.
BP also surprised investors by booking a $470 million profit from its 19.5 percent stake in Russia’s Rosneft despite western sanctions.
“We have now entered a new and challenging phase of low oil prices through the near and medium term,” Dudley said when the results were announced.