LAPFF to fight BP remuneration packages
UK - The Local Authority Pension Fund Forum (LAPFF) said it will fight for more security performance-linked remuneration packages at British oil giant BP.
At its annual general meeting on April 12, the company will be facing opposition to a remuneration report from the LAPFF, whose members control assets of £70bn(€104bn) and hold around 1.2% in BP, and possibly other institutional shareholders that the forum is contacting about the issue.
"We do not see any linkage between long-term incentives and BP's stated desire to be a leader in process safety management," said LAPFF chairman Darrell Pulk. "We have no choice but to oppose the remuneration report in this instance."
However, the LAPFF welcomed BP's decision to include process safety targets to the annual bonuses from this year. The forum also acknowledged that over the last two years bonuses had been cut because of safety issues. A refinery explosion in Houston in 2005 and a spill in Prudhoe Bay, Alaska, last year have tarnished the company's reputation.
But as Ebba Schmidt, consultancy services executive at PIRC explained to IPE, the Forum's interest is in long-term value creation. "Annual bonus is one thing but BP has a long-term incentive scheme that has a three year performance period. There is no link to any non-financial issues in that incentive scheme," she said.
Schmidt added that only outgoing CEO Lord Browne has a link to non-financial performance targets under that scheme which is "a first step" but the forum wants it for all executives.
A BP spokesman told IPE that this is an issue the remuneration committee will have to deal with. The committee is made up solely of non-executive directors at BP.