LONDON (Reuters) - Corporate governance body Pirc on Wednesday urged investors in BP (BP.L) to vote against executive pay at the oil major, raising the prospect of another embarrassing showdown with shareholders.
Investors and industry groups have become increasingly vocal in their opposition to big pay deals for executives since the global financial crisis began.
BP, Europe’s largest oil company by production, saw more than a third of its investors vote against its executive pay plan in 2009, up from 12 percent the previous year.
In March BP’s annual report showed Chief Executive Tony Haywood had a 41 percent rise in total pay in 2009, even though profits at the company dropped by 45 percent.
“Pirc considers that combined remuneration was excessive in the year under review (2009) and is also concerned regarding the lack of transparency surrounding the performance conditions attached to the Executive Directors Incentive Plan (EDIP),” Pirc said in a report on Wednesday.
The corporate governance body also said the fact that BP’s remuneration committee can override the results of one quantified performance condition in the EDIP was contrary to best practice.
Rival Royal Dutch Shell (RDSa.L) said in February that it would overhaul pay practices for top management, including freezing pay for Chief Executive Peter Voser, after a shareholder revolt.
The majority of investors in troubled bank Royal Bank of Scotland (RBS.L), housebuilder Bellway (BWY.L) and Provident Financial (PFG.L) opposed pay plans in 2009, while residential landlord Grainger (GRI.L) lost a shareholder vote on executive pay earlier this year.
Richard Lambert, Director General of the Confederation of British Industry, warned in a lecture last month that growing pay packages meant leaders of big companies risked appearing to inhabit a different galaxy and being “treated as aliens.”
The vote on BP’s remuneration report will take place at the company’s annual general meeting on April 15.
Reporting by Sarah Young; editing by Karen Foster