BIS Defends Under-Fire BP Pay Chief Dowling

Whitehall has leapt to the defence of the BP director who sanctioned the £14m pay deal that triggered one of the biggest shareholder revolts in British corporate history.

The Department for Business, Innovation and Skills (BIS) has suggested to Sky News that there is no case for Professor Dame Ann Dowling - who serves on its board as well as chairing the BP remuneration committee - to consider her position.

In a statement, a BIS spokeswoman said that last week's vote, which saw last year's pay report attract opposition from nearly 60% of BP investors, illustrated that reforms introduced during the last parliament were working.

Asked whether the revolt had implications for Professor Dowling's position, BIS said: "Departmental boards do not make or advise on policy."

The backlash against BP nevertheless highlights an awkward position for Professor Dowling, a respected academic, given that BIS was the Government department responsible for introducing tougher oversight of boardroom pay.

Officials at BIS acknowledged that juxtaposition, but said privately that there was no basis for requiring her resignation.

"The Government's pay reforms give shareholders effective tools to challenge boards on pay policies and awards," a BIS spokeswoman said.

"The vote at BP's AGM is just the latest evidence that shareholders are ready to use them where they have concerns.

"The policy is working."

Professor Dowling joined the BIS board in February 2014, after Sir Vince Cable, the last Business Secretary, had drawn up plans to introduce a binding shareholder vote on public companies' pay policies.

Last week's vote at the BP AGM was advisory rather than binding, but has nevertheless sent shockwaves through the City and revived memories of the 'shareholder spring' of 2012.

Sir Vince said last week that the oil giant's investors should call for boardroom scalps - potentially including that of Professor Dowling - given the reaction to BP chief Bob Dudley's £13.8m pay package.

"I am pleased as it shows that the legislation I introduced in coalition to empower shareholders to regulate executive pay is clearly having a significant impact," he told Sky News.

"I am also disappointed, though, that the message still hasn’t got through to chief executives about completely irrational and unreasonable pay demands."

Asked whether Mr Dudley or members of its remuneration committee should be targeted by investors, Sir Vince said: "Both."

Carl-Henric Svanberg, BP's chairman, said the board acknowledged the depth of concern about Mr Dudley's pay package, but declined to say whether it would look to modify last year's deal.

The head of the Institute of Directors, Simon Walker, said British boards were now "in the last-chance saloon" on the issue of executive pay.

Further revolts - which have already included Smith & Nephew (LSE: SN.L - news) , the medical devices-maker - are expected at companies including Anglo American (LSE: AAL.L - news) , the miner.