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The Guardian: BP’s Browne to get pension of £1m a year

· Chief’s pay down after a difficult 2006 for oil firm
· Company defends boss’s £22m retirement fund

Terry Macalister
Wednesday March 7, 2007

John Browne, BP’s chief executive, will stand down this summer after a period of extreme turbulence for the company with a pension pot of £22m and a retirement income of more than £1m a year, according to the annual report out yesterday.

The oil boss received a £900,000 bonus for his performance in 2006 which took his pay package to £4.57m while further share awards during the 12-month period could raise the total to about £7.5m.

The £4.57m is made up of a slightly raised salary of £1.57m, £95,000 of “non cash benefits”, the performance bonus and £2m from shares vested under a long-term incentive plan. The annual report also notes that Lord Browne was awarded 1.7m shares under the incentive scheme which could easily be worth a further £3m on the basis of previous payouts.

His salary was considerably lower than in 2005 when Lord Browne earned £6.35m, including a £1.75m bonus, even though BP’s profits during 2006 were up 15%.

A BP spokesman said the fall in the chief executive’s overall remuneration reflected the difficulties the company had been through in the aftermath of the fatal Texas City fire, Alaskan pipeline spills and investigations into its US trading activities.

But the official defended the £22m pension pot, saying it was based on 40 years of service for the company at the highest levels of the group. “He is worth it,” he added.

Lord Browne – consistently voted by his peers as the most admired industrialist in Britain – has seen his reputation tarnished in the past year particularly by the Texas City explosion which killed 15 and was partly blamed on cost-cutting.

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

BP said in January that Lord Browne would step down in July, 17 months earlier than planned, and be replaced by exploration and production head, Tony Hayward. The early departure was intended to avoid a period of drift during a long handover as BP sought to recover its reputation through investments in US infrastructure.

The news of Lord Browne’s premature departure also followed a disagreement last year between him and chairman Peter Sutherland over whether the chief executive should have to retire at 60, in line with BP’s historic practice.

The group has also been struggling with increasing pressure from Russian regulatory officials over alleged environmental violations on the Kovykta field in Siberia where state-owned Gazprom has been pushing to take a stake.

Yesterday the 50%-owned Russian business, TNK-BP, said it replaced 129% of its production with new reserves in 2006, ending the year with 7.8bn barrels of oil equivalent. BP’s success in replacing its reserves contrasts with other Western oil companies such as Shell which are struggling against declining reserves.,,2028023,00.html

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