BP Cuts CEO's Pay Package by 40%

BP has cut the total pay package for its CEO Bob Dudley to $11.6mn, 40% less than he got for 2015.

The disclosure was made in the UK major’s 2016 Annual Report released April 6.

The near-$8mn reduction in Dudley’s remuneration, from $19.4mn in 2015, was roughly 50% due to lower pension contributions, and some 50% as a result of discretion exercised by BP’s remuneration committee.

It exercised discretion after BP lost a vote about remuneration at its 2016 annual general meeting, and ahead of a new remuneration policy to be voted on at its May 2017 AGM. Worth recalling is that BP in 2016 had recommended that Dudley’s pay be increased.

BP CEO Bob Dudley (Photo credit: BP)

“We believe the new policy is simpler, more transparent and has strategic focus,” said remuneration committee chair Ann Dowling (pictured below), a world expert on the design of quiet airplanes and the Cambridge University professor of mechanical engineering.

Professor Dame Ann Dowling (Photo credit: Cambridge Univ)

A BP spokesman said that Dudley’s basic pay was not cut, having remained unchanged from 2014, and that any non-payment of performance bonuses did not relate to any specific BP project or strategy.

Iranian waivers extended

Elsewhere in the annual report, BP confirmed that waivers from EU and US authorities regarding to Iranian participation in the BP-operated Shah Deniz gasfield, in the Azeri part of the Caspian Sea, continue to apply – meaning that Iranian state NICO’s continued 10% stake does not incur any penalties for Shah Deniz and associated developments. BP’s share in the field is 28.8%. Gas from Shah Deniz phase 2 is expected to reach Europe by 2021.

BP has also cleared up things with US authorities over the UK Rhum gasfield that it operates.

BP and state-owned Iranian Oil Company each have 50% interests in Rhum field, shut in because of sanctions against Tehran from 2010-14. Production resumed, under temporary UK government control in late 2014. Since then, BP’s latest annual report discloses: “The temporary management scheme ceased, with control and management of IOC UK’s interest passing back to IOC UK, and BP obtained an updated [US Office of Foreign Assets Control] OFAC licence in relation to the continued operation of Rhum on 29 September 2016.”

Mark Smedley