Sunday, 25 March 2007

Tough turkey

It's strange to see BP get some credit for only paying Lord Browne £4.6m after the company's recent serious safety failures. For example see this bit in the Lombard column of the FT recently. The company has cut directors' bonuses for example, although only by 50%. That means Browne gets a bonus of 'just' £900,000.

Let's not forget that the bonus cuts come in the wake of the Texas City refinery blast that killed 15 people, and the Prudhoe Bay spill. Plus the highly critical Baker and CSB reports. It does beg the question what would have to happen for the company to decide that it was not appropriate to pay any bonus. It reminds me of the situation at Jarvis a couple of years ago where the directors were awarded bonuses in respect of the year of the Potters Bar rail crash.

More broadly you have to wonder what kind of impact this sort of 'sanction' actually has. It's pretty meaningless in terms of how much directors get paid. The situation is comparable to the directors being offered a massive banquet, far more than they could possibly eat, but being told: 'But you're only getting half a turkey'.

As a result not all shareholders think BP has gone anywhere near far enough. More soon.

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