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BP CEO Browne's Pay Fell in 2006 as Woes Mounted

Reuters
Tuesday, 6 Mar 2007 | 2:55 AM ET

BP Chief Executive John Browne saw his pay fall in 2006, despite a 15 % rise in the oil giant's profits, as BP suffered oil spills, accusations that cost cutting had hit safety and allegations of market manipulation.

BP said in its Annual Review on Tuesday that Browne's total pay package was 4.57 million pounds ($8.79 million) in 2006, down 28% from 2005.

Browne's salary, bonus and non-cash payments amounted to 2.5 million pounds ($4.87 million) in 2006, against 3.3 million pounds in 2005. The CEO is to step down in July. The value of the shares awarded to Browne under long-term share incentive schemes also fell, to 5.1 million pounds from 5.2 million pounds in 2005.

Under the 2006-2008 share scheme, Browne could also be awarded up to another 1,761,249 shares, the report said. This was down from the 2,006,767 maximum number of shares which he was entitled to under the plan reported in last year's Annual Review.

This is the second year in a row that Browne's salary and bonus has fallen, following problems in 2005, including an explosion at BP's Texas City refinery which killed 15 workers.

Cost Cutting Blamed

In 2006, regulators partly blamed that accident on cost-cutting, hitting BP's and Browne's reputations.

U.S. authorities also started a probe of BP last year for alleged manipulation of the propane market, and the company suffered a series of problems at its Alaskan operations following pipeline leaks.

These problems, and some delays on start up of key projects, overshadowed BP's strong results in 2006 and eroded the "management premium" which BP's shares had previously enjoyed over rivals such as Royal Dutch Shell.

BP said in January that Browne would step down in July, 17 months earlier than planned, and be replaced by exploration and production boss Tony Hayward.

The early departure was intended to avoid a period of drift during a long handover period and the announcement followed a disagreement last year between Browne and Chairman Peter Sutherland over whether Browne should retire at 60 years, in line with established BP practice.

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