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BP boss facing pay package revolt BP investors back Browne payout
(about 3 hours later)
A revolt over the pay package of outgoing BP chairman Lord Browne is expected at the company's annual general meeting, which has begun. BP investors have approved a pay report which includes its outgoing chairman in a three-year incentive scheme.
Major shareholders are thought to be preparing to reject the company's pay report which includes Lord Browne in a three-year incentive scheme. Lord Browne will leave BP with a £5.3m pay-off in July and a £21.7m pension, as well as millions of pounds in shares due under the incentive plan.
This would entitle him to payouts until 2009, despite leaving the firm in July. Opposition from individual shareholders to directors' pay, including that of Lord Browne, overshadowed the company's annual general meeting.
The Pensions Investment Research Consultancy (PIRC), has expressed "significant concerns" over the plan. Institutional support meant the report was approved by 83% of shareholders.
PIRC, which advises pension funds and fund managers, is advising members to vote against the report. 'Grotesque'
'Grotesque pay-off' Some shareholders had been keen to reject the company's pay report under which Lord Browne - despite leaving the firm this July - will share in a three-year incentive scheme, entitling him to payouts until 2009.
Lord Browne is expected to gain a £5.3m cash package, up to £21m of extra BP shares, and a pension worth £21.7m. However, chairman Peter Sutherland defended Lord Browne's pay packet.
BP said that Lord Browne's inclusion in the incentive plan was justified - saying that this reflected long-term decisions he was taking while still in the job. "Lord Browne's retirement was brought forward by mutual agreement and he should not be penalised for the decision, given the years he has spent building up the company," Mr Sutherland said.
The Association of British Insurers has cleared the pay package after BP halved the bonuses of directors last year. At the meeting one shareholder, Mike Porter, said BP had "broadly underperformed" the FTSE 100.
Separately, Labour leadership contender Michael Meacher has called on BP shareholders to try to block Lord Browne's payoff. Another, John Farmer, called upon the board to justify pay packages, saying the company's performance was "arguably pathetic".
"I call on BP shareholders to reject this grotesque pay-off," said Mr Meacher. The Pensions Investment Research Consultancy (PIRC), which advises pension funds and fund managers, had expressed "significant concerns" over the plan and had advised members to vote against the report.
"We need to end the situation where City bosses set each other's rewards." Labour leadership contender Michael Meacher was also among those calling on BP shareholders to try to block Lord Browne's payoff which he described as "grotesque".
Early departure "We need to end the situation where City bosses set each other's rewards," he said.
BP said last month that Lord Browne's pay packet had shrunk for the second year in a row to £4.57m in 2006, down 28% from 2005. However, the Association of British Insurers has cleared the pay package after BP halved the bonuses of directors last year.
Accidents and oil spills
BP said in March that Lord Browne's pay packet had shrunk for the second year in a row to £4.57m in 2006, down 28% from 2005.
The oil firm announced in January that Lord Browne would retire in July, 18 months ahead of his original departure date at the end of 2008.The oil firm announced in January that Lord Browne would retire in July, 18 months ahead of his original departure date at the end of 2008.
BP has suffered problems in recent years including oil spills in Alaska and an explosion at one of the firm's US refineries in 2005 in which 15 people died.BP has suffered problems in recent years including oil spills in Alaska and an explosion at one of the firm's US refineries in 2005 in which 15 people died.
Lord Browne has been with BP for 40 years, and led the firm for 12.Lord Browne has been with BP for 40 years, and led the firm for 12.