Oil major BP has slashed CEO Bob Dudley’s pay packet by 40 per cent for 2016 and cut the amount that he can pocket in future, in response to shareholder protest.
BP said on Thursday that Mr Dudley’s total pay for 2016 would be $11.4m, down from the $19.4m he got for 2015.
Last year, the company sparked outrage when it awarded Mr Dudley a 20 per cent pay increase for 2015 despite BP chalking up a record annual loss and slashing jobs.
Almost two thirds of BP shareholders voted against that award in April 2016, but the vote was non-binding.
Under a new policy proposed by BP in its latest annual report, there would be a clearer link “between the delivery of BP’s strategy, outcomes for shareholders and pay”, it said.
“I believe that the board has responded positively to the events of 2016 and has taken significant action,” said Professor Dame Ann Dowling, chair of the remuneration committee.
Royal London Asset Management, which holds a 0.7 per cent stake in BP worth around £679m, welcomed the move.
“We applaud the BP remuneration committee for being proactive in responding to the shareholder revolt last year and see this as a milestone in the engagement between companies and shareholders,” said Ashley Hamilton Claxton, corporate governance manager at the group.
“In particular, the committee applied discretion to override the formulaic outcome of the pay policy, which is a welcome step in the right direction.”
Analysis by the Equality Trust published last month showed that bosses of the UK’s biggest 100 companies now take home an average of £5.3m each year, which is 386 times more than what a worker earning the national living wage pockets.
That report showed that over two thirds of FTSE 100 CEOs are paid more than 100 times the average UK salary, and ninety per cent of them are paid at least 100 times more than the national living wage.
Citing the latest figures available at the time, the Equality Trust said that Mr Dudley’s pay was the fifth highest in the FTSE 100.
Martin Sorrell, chief executive of advertising giant WPP, topped the list. Other companies that made the top ten included Reckitt Benckiser, Sky, Shire, Prudential, RELX, Standard Chartered, Schroders and Lloyds Banking.
In light of the data, the Equality Trust said that it had developed a petition calling on the Government to introduce mandatory pay ratios for top earners.
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