BP shareholders registered their anger at senior directors’ pay and their connections to Royal Bank of Scotland by only narrowly passing the firm’s remuneration report today.
Chairman Peter Sutherland fended off criticism from investors over his senior position at the bailed-out bank and the role of former RBS chairman Tom McKillop BP’s board.
Around 38% of shareholders voted against the firm’s remuneration report today.
Sutherland was re-elected to his position as chairman with a majority of around 96% despite a threatened rebellion by shareholders.
At the meeting investors voiced their anger over the size of BP executives’ pay rises for last year, although the firm’s decision not to award increases in 2009 was given wide approval.
Both Sutherland and McKillop have been criticised in the wake of RBS’s taxpayer-backed rescue and over the controversial £703,000 (€795,000) pension of the bank’s former chief executive, Fred Goodwin.
Shareholder John O’Reilly told the meeting: “There should be no rewards for failure and Sir Tom McKillop led RBS to a catastrophic, disastrous failure.”
Another investor, who did not give his name, said to Sutherland: “The current environment has been caused by your friends, whom I call fat cats...
“You have been a member of the remuneration committee of RBS and when Sir Tom’s job is untenable, I do not understand why is not your job?”
Sutherland said the former RBS chairman had performed “extremely well” as a non-executive director of BP.
McKillop, who has resigned from the BP board, did not attend the shareholders’ meeting at the ExCel Centre in London’s Docklands.
Today’s vote came in the wake of calls from consultants PIRC – whose clients include institutional investors with about £1 trillion (€1.13 trillion) in assets under management – for shareholders to reject Sir Peter’s reappointment.
It also recommended shareholders vote against BP’s remuneration report for senior directors, saying last year’s pay rises were “not clearly justified”.
Sutherland, who earned £102,000 (€115,000) from RBS in 2008, left the bank’s board after a cull of non-executive directors in February. He was paid £600,000 (€680,000) as chairman of BP last year, a rise of around 14% on the previous year.
He is due to retire and has only agreed to stay on until a successor can be appointed.
McKillop joined the BP board as a non-executive director in 2004 and served on its remuneration committee, earning £95,000 (€107,000) in 2008.
BP was helped to record profits last year by soaring crude oil prices and a recovery in the group’s operating performance.
The firm posted a 39% increase in annual profits to a record $25.6bn (€19.45bn). But shareholders have expressed nervousness over a 24% fall in fourth-quarter profits to $2.6bn (€2bn) as the recession hit world demand.
Sutherland said the huge surge and then fall in the price of oil last year had created challenges for the company.
“There are few precedents even in our own history for such a rapid and dramatic deterioration,” he said.
But he added that the firm had “put in an excellent performance” last year, on “most serious measures”.
Chief executive Tony Hayward said BP had seen its costs rise significantly and planned to focus its efforts on driving these down.
He said the company had already reduced its headcount by 3,000 in 2008 and was on track to reduce its workforce by a total of 5,000 by the end of 2009.
This will include the removal of 20% of senior positions at the firm.
At the meeting both BP’s chairman and chief executive expressed their condolences for the families of the 16 men killed in a helicopter crash over the North Sea on April 1.
The 14 oil workers and two crew died when the Super Puma they were travelling in went down 11 miles north east of Peterhead as it was returning from BP’s Miller platform.
Sutherland, who said the search for his own successor was “well advanced”, told investors that the annual meeting – the 100th in the oil firm’s history - would “definitely, conclusively and absolutely” be his last as chairman.