Cable: City Must Demand BP Scalps Over Pay

Investors in BP should call for the resignations of BP's chief executive and members of its remuneration committee, according to the architect of the most recent overhaul of boardroom pay in Britain.

Speaking to Sky News, Sir Vince Cable, the former business secretary, said that shareholders should demand top-level scalps after the oil giant suffered one of the most humiliating rebellions in recent corporate history.

Almost 60% of BP investors voted against its remuneration report at a stormy annual general meeting in London, following the company's insistence that a £13.8m pay package for Bob Dudley was justified despite a £3.7bn loss last year.

Sky News had revealed last week that at least 20% of BP shareholders were likely to oppose the report, but the scale of the revolt stunned the City.

Sir Vince said the size of the rebellion demonstrated that the reforms he introduced three years ago were "having a significant impact", although Thursday's vote was advisory and has no impact on Mr Dudley's pay for last year.

"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 said.

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

"We are still seeing very extreme payments which are not based on performance.

"All chief executives are trying to get into the top quartile (for pay purposes), which logically they can’t."

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

His demand places him in conflict with Professor Dame Ann Dowling, an academic who has served on the board of the Department for Business, Innovation Skills (BIS) since February 2014.

Sir Vince said he admired and respected Professor Dowling.

Fund managers rushed to condemn BP after the results of the AGM vote was announced.

Ashley Hamilton Claxton, corporate governance manager at Royal London Asset Management, said the vote reflected "a serious disconnect between the board’s decision and the expectation of shareholders".

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" and warned that the response of BP's directors would "determine the future of corporate governance in the UK".