14/04/2016 09:24 BST | Updated 15/04/2017 06:12 BST

BP Chief Bob Dudley Faces Shareholder Anger Over Pay Amid Losses And Job Cuts

BP chief executive Bob Dudley is to face shareholders at the oil giant's annual general meeting amid investor anger over his 19.6 million dollar (£13.8 million) pay package.

Mr Dudley's remuneration has risen by a fifth on the previous year, despite the group posting its largest annual loss for 20 years and axing thousands of jobs worldwide. 

The Institute of Directors (IoD) urged shareholders to scrutinise the pay deal and warned the increase could send the "wrong message" to other companies.

Aberdeen Asset Management is expected to be among a pack of major investors voting against Mr Dudley's pay after it stated that BP's remuneration awards were "overly complex". 

But it said it was "supportive of management's strategy" and was "sure the company will take note of shareholders' feedback".

Its comments come amid a chorus of criticism over Mr Dudley's pay hike in a year when BP slumped into the red by 5.2 billion US dollars (£3.6 billion) following a collapse in oil prices.

The IoD said the £13.8 million pay deal might seem "unjustified" to many shareholders following BP's performance over the last 12 months.

Director-general Simon Walker said: "BP is not a badly run company, and its current woes are common to other firms in the sector. Nevertheless, the UK Corporate Governance Code is clear that pay should be tightly linked to performance and that targets should be stretching and rigorously applied.

"Should the pay package be approved, it could send the wrong message to investors and other boards. We therefore urge all shareholders to scrutinise the pay deal of Mr Dudley very closely.

"If his pay deal is approved, but with a significant minority voting against, the BP board must explain how it will engage with this group of shareholders - they cannot and should not be ignored."

Shareholder group Sharesoc has branded the pay deal "simply too high", while Royal London Asset Management, Glass Lewis and Institutional Shareholder Services have also expressed their opposition.

But any vote against Mr Dudley's pay deal is only advisory and will not lead to the package being blocked.

The pay deal will see his salary rise from 1.82 million US dollars (£1.27 million) in 2014 to 1.85 million US dollars (£1.3 million) for 2015, while his annual cash bonus will also rise from 1 million US dollars (£702,733) in 2014 to 1.39 million US dollars (£976,799) for last year. 

Pressure to reject the pay deal comes after some shareholders also expressed their anger over his pay ahead of BP's AGM in 2015, when his remuneration received a 5% hike.

BP said in January that it would have to axe another 3,000 jobs worldwide in its downstream business - including refining, marketing and distribution - by the end of 2017, on top of the 4,000 cuts announced last year under a swingeing overhaul to slash costs.

A spokesman for BP said: "Despite the very challenging environment, BP's safety and operating performance was excellent throughout 2015 and management also responded early and decisively to the steep fall in the oil price.

"BP's performance surpassed the board's expectations on almost all of the measures that determine remuneration - and the outcome therefore reflects this. And these clear measures derive directly from BP's remuneration policy which was approved by shareholders at the 2014 AGM with over 96% of the vote."

The group's remuneration policy is voted on every three years, with the next vote taking place at the AGM in 2017.

Stefan Stern, director of the High Pay Centre, said BP's remuneration committee should exercise "restraint".

"There is no need for these numbers to be this high. He's going to do a good job whatever that number is," he told the BBC Radio 4 Today programme.

Ashley Hamilton Claxton, corporate governance manager at Royal London and a BP shareholder, said the board was "out of touch".

She told Today: "We think it sends the wrong message in terms of paying him the maximum bonus when he has made a significant loss."

John Purcell, managing director of City headhunters Purcell & Co, insisted Mr Dudley had "performed exceptionally well" against the targets he had been set and said it was "easy to pick on a pantomime villain".

"If you are going into a job where you are likely to be publicly vilified, that will come with a significant premium," he told the programme.