BP Chief Executive Officer Bob Dudley is due to receive $19.6 million in pay, a 20 percent raise, even after the company lost a record $6.4 billion and laid off 5,000 workers last year.
The London-based energy giant, which operates the BP Whiting Refinery on Lake Michigan, announced another 7,000 layoffs worldwide so far this year in response to a huge drop in the price of crude oil. Dudley is in line to be paid 280 times as much as workers at the Whiting refinery, who earn around $70,000 a year on average, according to the United Steelworkers union.
BP shareholders will vote on whether to approve the compensation plan at BP's Annual General Meeting on Thursday at the ExCeL International Convention Center, in London.
Dudley's compensation package had been $16.3 million in 2014, and is due to increase by about $3.3 million for 2015 because the company's financial performance exceeded expectations. Even so, BP shares dropped 24 percent in value last year. The company recorded its single-largest annual loss in history, due largely to the fall in crude oil prices.
Activist investors aren't happy with the proposed compensation, saying it rewards failure.
ShareSoc, the UK Individual Shareholders Society, is urging shareholders to vote against it at the annual meeting on Thursday because it's "simply too high, and particularly so in a year when the company suffered a record loss of $6.4 billion in 2015."
"If you want to be simple, then it would be much better to say that the maximum bonus is 375 percent of salary, of which 20 percent is paid in cash, 40 percent is paid in deferred shares with no performance conditions and a further 40 percent is subject to satisfactory safety and environmental sustainability performance," ShareSoc spokesman Cliff Weight said. "The BP explanation of 225 percent of salary maximum bonus, deferred bonus, discretionary deferred bonus and potential matching payments is confusing and adds complexity, in my view."
ShareSoc also objects that the bonus will contribute to his pension, which the activist investor group says creates too strong an incentive for focusing on short-term performance.
"By my calculations, the CEO’s accrued pension is nearly $2.5 million per annum, which means that the transfer value of the accrued pension could be about $35 million," Weight said.