Bush was speaking on the BBC Radio 4 Today programme on the cusp of BP’s annual shareholders’ meeting today where a number of investors have vowed to vote down chief executive Bob Dudley’s 20% pay rise, which will take his salary package to £14m.
Bush decried the way chief executives’ pay was based on a formula contrived two or three years previously as not sensible claiming that “there is a major problem in the way chief executives are recruited and paid”, dubbing the pay model as “broken”.”
Many shareholders have serious issues with Dudley’s rise as it comes after BP reported a £3.6bn loss and outlined plans to axe thousands of jobs.
Pirc’s opposition is echoed by a tranche of other bodies such as Shareholder group Sharesoc, the Institutional Shareholder Services, Aberdeen Asset Management and Royal London Asset Management. Even the IoD has come against the rise saying the pay hike sent “the wrong message to other companies”.
In its defence of the move, BP – whose pay policy is subject to a binding shareholder vote every three years – said the oil and gas giant had outperformed the majority of measures used to determine pay.
Despite the growing groundswell of institutional and shareholder opposition to the rise, the vote on BP’s remuneration is non-binding and only “advisory”, meaning even a resounding call to reverse the agreement would not necessarily see a change of tack from BP.
A spokesman for BP told the BBC that shareholders themselves had backed the pay formula.
“Despite the very challenging environment, BP’s safety and operating performance was excellent throughout 2015… BP’s performance surpassed the board’s expectations on almost all of the measures that determine remuneration – and the outcome therefore reflects this.
“And these clear measures derive directly from BP’s remuneration policy which was approved by shareholders at the 2014 AGM with over 96% of the vote,” the spokesman said.