BP’s Chief Executive, Murray Auchincloss, saw his compensation reduced by 30% to £5.4 million in 2024, as revealed in the company’s latest annual report.
This decrease came in a year when the British oil giant fell short of its financial goals and scaled back its green investment commitments amid pressures from US activist investor, Elliott Investment Management.
Auchincloss’s basic salary increased from £1 million to £1.45 million; however, a shortfall in achieving targets across key performance areas such as profits, cashflow, and safety drastically reduced the variable component of his remuneration from £3.4 million to under £1 million.
Following a year of disappointing results, with a notable drop in profits from nearly $14 billion in 2023 to $8.9 billion (£7.9 billion) in 2024, Auchincloss declared a major revision of BP’s strategy last month.
This strategic pivot away from ambitious low-carbon investments involved a cut of over £4 billion, with Auchincloss citing an overly optimistic view of the green transition’s pace.
The reorientation, significant enough to omit a shareholder vote, contrasts sharply with the 2022 resolution where BP’s green targets were endorsed by its investors.
The strategy shift also influences how BP’s executive bonuses are structured, disconnecting a significant part from previous “transition growth” plans focused predominantly on low-carbon projects.
For 2024, this realignment saw 10% of executive bonuses tied to profits from these plans, of which 80% were low-carbon initiatives.
Moving forward, the bonus scheme will emphasize free cash flow and operational reliability more, although 15% of the variable executive pay will remain linked to carbon emission reductions.
This compensation adjustment has sparked controversy. Campaigners like Global Witness have criticized Auchincloss’s £5.4 million pay as excessive, highlighting the disparity with the average UK salary and accusing BP of insensitivity towards the public’s financial hardships amidst an ongoing cost-of-living crisis.
The outcry underscores a broader discontent with the perceived greed within the oil sector, particularly in times of economic strain.
Moreover, Auchincloss is not alone in experiencing a pay cut; Tufan Erginbilgiç, CEO of Rolls-Royce, also saw a reduction in his total remuneration to £4.11 million in 2024, down from £13.6 million in the previous year, reflecting a balancing of initial compensatory shares awarded upon his recruitment in 2023.
