Items 1 and 12:
In response to a global crisis, BP has dramatically reduced spending to back a 65% drop in oil prices in the first quarter 2020. BP slashed its 2020 budget by 25% to around $12bn and reduced output at its U.S shale operations. However, BP has not reduced its dividend which we consider unsustainable: the payout is excessive, the dividends often are not covered by EPS and/or FCF. This year, BP proposes a total dividend of $8.3bn, which will be financed by increased debt (+$2.6bn in 2019 with a further increase in 2020), divestments and budget reductions. Its competitors privilege liquidity, like Norwayns Equinor who was the first to cut its dividend by two thirds and suspend a $5bn share buyback. And BP continues to pay dividends without shareholder approval. Moreover, the dividend increased by 1.2% despite the fall in EPS of 58%. Considering this, ECGS does not approve the proposed repurchase of shares.
Item 2: Remuneration report
We have concerns about the alignment of the CEO's STI and BP's overall performance: the bonus increased by 67% while the EPS dropped by 58%. In aggregate, Bob Dudley the CEO of BP was granted a total remuneration of $13.74m (+2.1%). The variable incentive is 6.1x the base salary. The CEO's total remuneration is excessive and corresponds to 282% of the median CEO remuneration of UK companies in the MSCI Europe index or 261% of the Oil and Gas sector median.
Item 3: Remuneration policy
The CEO's maximum variable remuneration opportunity (both short-term and long-term) is 725%, which largely exceeds our limit of 300% of the base salary. The remuneration package is excessively weighted towards performance-pay.
BP is an integrated oil and gas group based in the United Kingdom. Co. is engaged in the exploration and production of crude oil and natural gas; refining, marketing, supply and transportation; and the manufacture and marketing of petrochemicals. Co. operates globally, with business activities in Europe, the U.S., Canada, Russia, South America, Australasia, Asia and parts of Africa. Co. operates in two business segments: Exploration and Production - including oil and natural gas exploration and development and production; and Refining and Marketing- activities include the refining, manufacturing, supply and trading, marketing and transportation of crude oil, petroleum and petrochemicals.
Founded in 1995, Proxinvest is an independent proxy firm supporting the engagement and proxy analysis processes of investors. Proxinvest mission is to analyse corporate governance practices and resolutions proposed at general meetings of listed firms.
Proxinvest main services are :
Proxinvest has been a pioneer and champion of good corporate governance and has grown into a recognised expert in the field.
Proxinvest is independently-owned and only works for investors : Proxinvest does not provide consulting services to the companies it covers, mitigating related risks to its clients and ensuring the independence of our analysis. As a result Proxinvest is able to take a robust, independent, engaged and unconflicted view of the companies in which our clients invest.
As Managing Partner of Expert Corprate Governance Service Ltd (ECGS), Proxinvest has built a large network of corporate governance experts to support clients in corporate governance analysis worldwide.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.