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BP slashes CEO Bob Dudley’s pay packet by 40%

Written by Alan Shields – 06/04/2017 11:55 am

The 40% reduction, revealed today in the supermajor’s 2016 annual report, comes after a number of cost-cutting changes, including a 25 per cent reduction in bonuses handed out for hitting targets.

Dudley’s maximum payout under the firm’s long-term incentive plan is to drop from a seven times to five times his basic annual salary of $1.9million.

Last year, around 59% of shareholders opposed Dudley’s $19.4 million pay and benefits package, including his pension.

The total 2015 renumeration package rose 20% despite the company reporting steep losses.

Executive salaries and bonus cultures have come under increasing scrutiny in recent years following a strong of corporate scandals such as the collapse of chain store BHS.

Shell’s chief financial officer Brian Gilvary’s total remuneration for 2016 dropped to £4.2 million from £5.1 million pounds in 2015.

BP said that from 2017, the proportion of annual bonus that must be deferred into shares will be increased from 33% to 50%.

However, it is expected that Bob Dudley and Brian Gilvary will maintain a shareholding of at least 250% of their salary for two years following retirement.

The changes will now need to be passed by shareholders at the group’s annual general meeting, set to be held on May 17.

Professor Dame Ann Dowling, chairwoman of BP’s remuneration committee, said: “After a thorough review and extensive shareholder engagement, we believe the new policy is simpler, more transparent and has strategic focus.”

The group said employees at a management level – representing around 22% of its workforce – saw their pay rise by 3.5% on average last year, while bonuses fell 7.6%.

In comparison, the boss of fellow oil giant Royal Dutch Shell (LON: RDSB) was handed a 54% hike in his pay package last year to £7.5 million despite sliding profits.

Chief executive Ben van Beurden’s pay deal came as he was awarded a potential £3.8 million under a long-term shares bonus scheme, according to the group’s annual report.

But his annual bonus was cut by nearly a third to £2.1 million after Shell saw annual profits drop 8% to a worse-than-expected £2.9 billion) in 2016, a year in which it also axed another 2,200 jobs.

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