BP paid out $1.1 million worth of shares on Feb. 15 to former chief executive Tony Hayward under a three-year incentive plan, even though Hayward resigned in the wake of the massive Gulf of Mexico oil spill in 2010.
Hayward also earned $194,973 in fees in 2011 as a director of BP’s TNK-BP joint venture in Russia, according to the company’s annual report released Tuesday. The company’s stock price is down more than 20 percent since the spill.
The London-based oil giant gave current chief executive Bob Dudley a raise, though his $6.8 million pay package of salary, annual bonus awards, and stock grants and options remains smaller than those given to most of his counterparts at big oil companies such as Exxon Mobil or Chevron.
In a couple of years, however, he could catch up. On March 9, 2011, Dudley received a stock award under the Executive Directors Incentive Plan that, at today’s stock price, would be worth about $10 million when vested in February 2014.
The pay information, part of the company’s Securities and Exchange Commission disclosures, comes just as BP is working to settle claims related to the 2010 oil spill, which was triggered when a Gulf of Mexico exploration well suffered a blowout, killing 11 people, sinking the costly drilling rig and ultimately spilling as much as 4.9 million barrels of oil into the sea.
“We recognize a concern by government, and society at large, of excess in this area, but cannot ignore the reality of a global competitive market for top executive talent,” Antony Burgmans, a BP director and chairman of the remuneration committee, wrote in the company’s annual report. “We respect investors’ expectation for pay to be strongly tied to performance while also wanting to ensure that executives receive fair reward for their achievements.”
The company says that 30 percent of the annual bonus is tied to safety, but the larger performance bonus is focused on shareholder returns, reserve replacement and operating cash flow.
In 2011, Dudley received a salary of $1.7 million and a 150 percent bonus, $850,000 of which was paid in cash and the rest deferred. He also received contributions to a pension and $788,300 worth of stock because 2011 was the end of an earlier three-year performance plan.
Dudley’s salary this year will again be $1.7 million. He can get a 225 percent bonus if the company exceeds its targets, the annual report says. The company can also award Dudley “performance shares” worth 5.5 times his salary.