LONDON BP has cut Chief Executive Bob Dudley's 2016 pay package by 40 percent to $11.6 million, the latest British bluechip company to rein in executive pay after a wave of shareholder revolts.
The oil company has reduced Dudley's payout and introduced changes from this year that will lower executives' performance incentives. The cuts come after around 60 percent of shareholders opposed BP's pay policy at last year's annual general meeting.
Executive pay has come under growing scrutiny in Britain after a string of corporate scandals, such as the collapse of store chain BHS, which has fuelled mistrust of the high levels of pay awarded to company bosses.
"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 Royal London Asset Management.
BP's pay policy changes, which will apply for the coming three years if approved by shareholders at the annual general meeting in London on May 17, include lowering Dudley's maximum long-term payout to five times salary from seven times and cutting bonus payments by a quarter.
"I have consulted widely with shareholders and listened to and sought to act on their concerns, and have been sensitive to developments in the society in which we work," Ann Dowling, chair of BP's remuneration committee, said in the company's annual report published on Thursday.
Dudley's 2016 pay cut was a result of "downward discretion" to the four components of his total pay, the company said.
Even after a cut of nearly $8 million, Dudley's pay remains well above that of rival European oil companies.
Shell's Ben van Beurden was awarded an 8.263 million euro ($8.8 million) pay package for 2016, a 60 percent jump year on year, while Total's Patrick Pouyanne took home 3.8 million euros last year.
BP Chief Financial Officer Brian Gilvary's overall pay package will be cut by 18 percent to 4.2 million pounds ($5.2 million).
Other large British companies, such as Reckitt Benckiser and GlaxoSmithKline, have also cut executives' pay after shareholders had voiced concerns about their remuneration plans.
BP's annual report also showed the oil company cut a net amount of 5,300 jobs in 2016, after reducing 4,700 roles in 2015, as part of plans to rein in spending in response to weak oil prices.
($1 = 0.8028 pounds)
(Additional reporting by Ron Bousso; editing by Jane Merriman, Greg Mahlich and David Evans)