BP shareholders set to reject Browne pay plan

Oil giant BP was today facing a shareholder revolt regarding the pay package of departing chief executive Lord Browne.

Major shareholders of BP are said to be ready to reject the company's remuneration report amid concerns over Lord Browne's inclusion in the company's latest three-year incentive scheme, which runs until the end of 2009, despite stepping down as chief executive in July.

The Pensions Investment Research Consultancy (PIRC), which advises pension funds and fund managers, has already expressed "significant concerns" over the BP remuneration committee's decision to allow Lord Browne to take part in the three-year plan.

PIRC is advising its members to vote against the report on Thursday, amid wider concerns over the generosity of BP's pay packages for directors. Its clients control funds worth more than £750bn (€1.1bn) in total.

US lawyer William Lerach is leading an action on behalf of the London Pension Fund Authority and the pension fund of US union Unite Here regarding the size of the BP chief's payoff.

Mr Lerach told the Guardian newspaper that he did not want Lord Browne "leaving the scene with a wheelbarrow overflowing with money".

Drugs company GlaxoSmithKline was the first firm to have its remuneration report rejected by shareholders in 2003 after the Government introduced votes on the issue.

The BP boss could theoretically gain 3.8 million shares under plans ending in 2007 and 2008 - worth more than £21m (€30.8m) at the current share price - although in the last two years directors have gained around a third of their potential maximum.

Lord Browne would gain the latest allocation, which is yet to be set, despite being at the helm of the company for six months into the three-year plan.

A company spokesman said his inclusion reflected the long-term nature of Lord Browne's role in setting BP's strategy.

He said: "The decisions he could take up until the last day in the job would still have an impact on the group in years to come."

The concerns over his package come in a year when Lord Browne has announced he will retire earlier than expected and has come under attack over two critical reports into the Texas City refinery explosion in March 2005, which killed 15 workers.

He is already in line for a £5.3m (€7.78m) payoff when he retires - a package which includes two years' salary, a bonus of up to 130% of salary and £90,000 (132,205) in fringe benefits. His pension pot totals £21.7m (€31.8m) after 40 years' service with the oil company.

BP is not obliged to act if shareholders do reject the remuneration report at the company's annual meeting in London on Thursday.

The BP spokesman added: "It is not a binding vote but clearly if a significant number of shareholders are expressing an opinion it is in the company's interest to take note of that."

Despite other problems, which included the discovery of discovery of pipeline corrosion at its Prudhoe Bay field in the US, BP still made profits of US$22.25bn (€16.55bn) during 2006.