ShareSoc Advises Investors to Vote Against BP Plc Remuneration Report

PRESS RELEASE 73 11/4/2016

ShareSoc (the UK Individual Shareholders Society) is advising its Members to vote against the Remuneration Report resolution at the forthcoming Annual General Meeting of BP. We consider the pay of the CEO to be simply too high, and particularly so in a year when the company suffered a record loss of $6.4 billion in 2015. Even so his pay went up by 20%. Part of the reason for the high pay was the excessively complex remuneration scheme.

Background

The bonus has 6 performance measures, bonus is pensionable and the LTI has 5 performance measures.
Why does the BP remuneration committee think their pay structure is simple when it is highly complex?
Why is the CEO paid so much ($20 million), when performance has been below average over the long term?

Not simple nor transparent.

The remuneration chair says “our pay structure is relatively simple”. ShareSoc disagrees.

Cliff Weight, ShareSoc spokesman on remuneration issues said “If you want to be simple, then it would be much better to say that the maximum bonus is 375% of salary, of which 20% is paid in cash, 40% is paid in deferred shares with no performance conditions (other than clawback) and a further 40% is subject to satisfactory safety and environmental sustainability performance. The BP explanation of 225% of salary maximum bonus, deferred bonus, discretionary deferred bonus and potential matching payments is confusing and adds complexity, in my view.”

The annual bonus has six performance measures, two of which are normalised for changes in oil and gas price and refining margins. The impact in $ on cash flow, profits and bonus of normalising is not explained.

Making bonus pensionable for the CEO adds enormous complexity. The CEO is aged 60 with 36 years’ service. His pension is based on his final salary which includes the average of the best three consecutive years of bonus in the last 10 years of service. The problem with making bonus pensionable is that it creates far too large an incentive for short-term performance. These issues have been well debated in the UK and it is now considered (and has been for many years) that best practice is that bonus is not pensionable.

Cliff Weight also commented “By my calculations, the CEO’s accrued pension is nearly $2.5 million per annum, which means that the transfer value of the accrued pension could be about $35 million.”

The long-term incentive plan has five performance measures, and an annual award of a maximum of 5.5 times salary of shares. Only one of the performance measures is transparent, BP’s TSR ranked relative to the other oil majors. The others are set against internal BP targets. Cliff Weight noted “This makes it very difficult for shareholders to judge how easy or difficult the targets are. It also means the plan is complex – not ‘simple’”.

For further information, please contact:

Roger Lawson
Deputy Chairman, ShareSoc
Telephone: 020-8295-0378

Post Date: April 11, 2016

Group description:	Our group is interested in sustainable investing and our goal is to identify and evaluate businesses that will thrive through innovation and their transition to a ‘One Planet Economy’. By leveraging the skills of group members, we aim to deeply understand these businesses, particularly focusing on how they develop long-term valuable benefits for their customers. Each year, we plan to evaluate around seven businesses to identify opportunities where our valuation exceeds the market price. A successful outcome is defined as achieving a compound annual growth rate (CAGR), including dividends, of 10% over a decade.
Meeting Type/Venue:	Meetings are in-person in a pub near to Waterloo station in London.
Meeting Frequency/Timing:	Meetings are bi-monthly on a Monday from 10:45am to 4:30pm. Members are expected to also pay for their own lunch which secures the group free use of a private room in the pub. The cost is expected to be £35-40 per person, per meeting, in addition to your SIGnet membership fee.

Group description:	SIGnet Taunton is a new group with around 10 keen members at present, with a range of investment styles and experience. We welcome new members.
Meeting Type/Venue:	In person meetings at a golf club near to the centre of Taunton.
Meeting Frequency/Timing:	We meet on the first Monday of every month at a golf club near to the centre of Taunton, 11am until 3pm with a lunch break.

Group description:	An online group for those who are new to investing, or have only been investing for a few years. Including topics such as: – What is a share or a bond, why and how to buy them. – Comparing funds, unit trusts, Investment trusts and exchange traded funds. – Portfolio management and diversification. – ISAs, pensions, SIPPS and how to save tax. – How terms such as PE ratio and dividend yield are used to value a share. – How to use technical analysis or charting.
Meeting Type/Venue:	Online using Zoom.
Meeting Frequency/Timing:	Meetings are usually held on the last Monday of the month at 7:00pm.

Group description:	An online group for those who already have some experience in investing. Covering topics such as finding companies to invest in, financial statements and ratios, valuation / margin of safety, analysis of companies and investment trusts and exchange traded funds.
Meeting Type/Venue:	Online using Zoom.
Meeting Frequency/Timing:	Meetings are usually held on the last Wednesday of the month at 7:00pm.

Group description:	The Equity Income Group welcomes investors of all levels of experience, from beginners to advanced. The focus of meetings is on dividend paying Investment Trusts, though there is also discussion around individual shares.
Meeting Type/Venue:	Meetings are held online.
Meeting Frequency/Timing:	Meetings are held every 6 weeks on a weekday between 7 and 8:30pm.

Group description:	A welcoming group open to all types of investors. Typical meeting content is to have a deep dive presentation on a topic selected by the participants and a session on buy/ sell/ key lessons learnt last month.
Meeting Type/Venue:	In person at a friendly pub close to Piccadilly Circus
Meeting Frequency/Timing:	Monthly during the evening on the first Wednesday of the month.

Group description:	All levels of experience welcome. A typical meeting agenda includes: – Macro Environment – Trades: Members review existing positions and identify securities with promising TA entry patterns or setups and with suitable risk/reward. Any security, long, short, futures, options may be considered. The convener takes actual positions in trades and maintains his own detailed ledger, accurately measuring performance of individual securities and cumulative activity. Members are notified by e-mail prior to the entries or exits that are decided upon. Following each meeting an updated copy of the ledger is circulated together with the next meeting agenda. Members may wish to maintain similar ledgers of their own but there is no obligation to do so. – Technical Analysis: Techniques and systems used in trades. Members can request discussion of particular aspects of TA.
Meeting Type/Venue:	Online via Zoom
Meeting Frequency/Timing:	The first Tuesday of every month from 7 to 9pm

Group description:	Open to all investors / people with an interest in investing. Typical meeting will involve members talking about recent purchases, successes, failures and possible future purchases. Also with occasional visiting speakers or members making presentations on a topic of interest.
Meeting Type/Venue:	We aim to meet on the last Tuesday of each month in a private room at a pub in Playhatch. Start time 7pm with members encouraged to meet up around 6pm for a bite to eat / drink before hand, if their diaries allow.
Meeting Frequency/Timing:	7pm on the last Tuesday of the month. Meetings likely to last about two hours but with informal ‘overspill’ before / after.

Group description:	Our group members have wide ranging investment experience and work backgrounds. Discussion topics include reviewing our recent stock or collective investment buying and selling activity, plus what we are considering buying or selling and the reasons for our decisions. We also have a wider discussion on where we think opportunities might arise in the next few months and what we think needs to be avoided. Members occasionally lead discussions on specific topics such as recent events attended, articles or books of interest and sources of investment ideas and information.
Meeting Type/Venue:	During the pandemic our meetings were held on Zoom, but we have now resumed meeting in person at a location a few miles to the west of Colchester. Most meetings will now be in person, but it is possible that occasional meetings will be held on Zoom in special circumstances.
Meeting Frequency/Timing:	We meet midweek every two months. Zoom meetings run for about two hours from 10.30am and in person meetings from 11am until about 3pm, including a break for lunch.

ShareSoc Advises Investors to Vote Against BP Plc Remuneration Report

PRESS RELEASE 73 11/4/2016

Leave a Comment Click here to cancel reply.