Chief Executive Officer of BP plc Bob Dudley got a 25% increment in his total salary and bonuses last year. He had also received around $10.17 million of compensation in the year 2013, while receiving $12.74 million in 2014.
As reported by Reuters, the yearly salary and bonuses of Mr. Dudley decreased to $2.95 million last year from $4.21 million in 2013. However, in spite of the decline the major portion of total rise in compensation was due to share’s award and deferred bonuses. As per the BP regulatory filing, these remunerations and share’s award increased to $9.79 in 2014 from $5.96 in 2013.
The increment came in spite of the falling crude oil prices, which had a negative impact on company’s overall profitability. Since June last year, the crude oil prices have taken a dip up to 50%. Furthermore, the company was the culprit of the largest oil spill in the history in Gulf of Mexico, for which the penalty amount is about to come. However, BP has spent billions in its recovery program and on compensating the victims.
In order to tackle the influence of falling prices of crude oil and huge penalty amount to be announced, the oil giant company has implemented a “value over volume” program to emphasize on quality instead of quantity. According to the program, BP has announced its plan to reduce its workforce and capital expenditure by significant numbers. The London based company has already declared a salary freeze for almost 84,000 employees of the company.
Shareholders believe that the pay raise is a negative step taken by the company as it cannot be justified amongst plummeting oil prices. In 2014, certain amount of shareholders disagreed with the decision of Mr. Dudley’s annual pay raise however it was approved by majority. The London based company stock price has tumbled by 16% since 2013.
According to financial times, BP justified its CEO pay raise by saying,” Mr. Dudley’s compensation is closely related with his performance, the salary he received last year was because of the company’s delivery of strategic targets during the last three years”. Furthermore, majority of the increment has been given through share awards, which will line up his plunders with the shareholder’s interest.
BP stock declined by 0.84% and was trading at $41.18 before the market close on Thursday 5th March. The British oil producer company has a 30-day moving average of 7.33 million shares.