Shareholders of the oil and gas firm BP (billed as one of the seven biggest companies of its type in the world) have voted to reject CEO Bob Dudley’s bonus payment of just under £14 million. The revolt is one of the biggest of its kind and has led many people to question why Dudley was given the payment in the first place.
The vote that took place after the payment was announced went 59% – 41% in favor of rejecting the payment. However, the vote is not binding, so the payment could and probably will still go ahead, regardless of what the company’s shareholders may say. The shareholders voted against the payment mainly because of the current business crisis. BP’s profits are falling, resulting in thousands of people across the world losing their jobs and share prices steadily falling. This has been coming since the Gulf of Mexico oil disaster, when, in 2010, a BP owned and operated Deepwater Horizon oil exploded and sank. Oil flowed into the sea for 87 days. It was one of the biggest man made environmental disaster in history. So why should the CEO have a 20% pay rise while thousands of people lose their jobs?
BP have released a statement saying that Dudley had met every target set for him over the course of the last financial year and couldn’t be blamed for the reasons BP is losing money (£3.6 billion over the last year) and the fall in oil prices over the last year. They have also said that the shareholders concern has been listened too and that they will sit down with their largest shareholders to discuss the situation and try to come up with some kind of solution. The money that the CEO received is also due to be review in 2017, again with the company’s largest shareholders.
The shareholders do remain supportive of Dudley, 99% voted that they want him to remain in his position. Dudley was bought in to steady BP after the Gulf of Mexico oil spill in 2010 and to make sure the company didn’t suffer further losses. BP are still one of the biggest gas and oil firms in the world, but the company is losing money, year on year. So does he deserve a 20% pay rise, when the company loses money and thousands lose their jobs. Well, it is very hard to justify it. Dudley hasn’t necessarily done a bad job, if he were doing particularly poorly the shareholders wouldn’t have backed him so substantially.
The issue is, even though the shareholders do support Dudley but it simply isn’t right that he gets a 20% gain whilst thousands of people lose their jobs. To put it into perspective, Shell boss Ben von Beurdon’s pay was cut by 77% when Shell went through a similarly turbulent time a few months ago. It doesn’t look like the best decision to raise Dudley’s pay, even by 10-20% would have saved at least £2 million pounds, which could have been put toward better causes within the company. Saving some peoples jobs for example.