BP has denied to senior staff that the board was “unduly harsh” in its decision to claw back millions of pounds in pay from Kerry native Bernard Looney, in a move that underscores unease over the abrupt departure of the former chief executive.
In an eight-point question-and-answer memo shared with executives, one of the points addressed was: “Has the board been unduly harsh in how it has treated Bernard?”
The memo’s response stressed that the “great majority” of the pay forfeiture “came as a result of his own decision to resign with immediate effect”.
The document was shared internally on Wednesday when BP said that it had fired Mr Looney without notice after finding that he committed serious misconduct. This meant he would have to forfeit as much as £32.4 million (€37.6 million) in bonus, salary, pension allowance and share awards.
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Mr Looney resigned in September after BP received allegations that he had failed to disclose past relationships with colleagues. He admitted at the time that he had not been “fully transparent” with the board, led by chair Helge Lund. Mr Looney’s departure has rocked the 114-year-old British energy group, raising questions over the number and nature of his workplace relationships as well as his conduct while at the helm of the company. The allegations that prompted his resignation included an accusation that Mr Looney had promoted women with whom he had past undisclosed relationships.
The company explained in both the internal memo and its public statement on Wednesday that as much as 87 per cent of the £32.4 million Mr Looney would forfeit had been lost the day he resigned, in line with BP’s “shareholder-approved remuneration policy”. The rest was lost because of the misconduct decision.
“The board decided that when Bernard gave assurances around his past relationships with colleagues, he had given in inaccurate and incomplete information and knowingly misled the board” it said in the internal memo. “The board decided that this amounted to serious misconduct.”
The document’s talking points suggest BP’s board was concerned about how the decision to dismiss Mr Looney without notice and claw back funds would be received by some BP staff.
The document stressed that Murray Auchincloss the FTSE 100 company’s interim chief executive was not involved in the decision, which BP said was taken by the non-executive members of the board.
The decision to fire Mr Looney brought his 12-month notice period to an immediate end. He will forfeit a maximum of £32.4 million, dependent on the value of shares that form part of unvested stock awards. The total includes almost £1 million that Mr Looney will have to pay back to the company.
BP and Mr Looney declined to comment.
Mr Looney made his first public comments since his departure on Wednesday, saying he was “disappointed with the way the situation has been handled” and that he was proud of what he had achieved as chief executive.
When Mr Looney resigned in September, the company said it had begun an investigation into the allegations with the support of external counsel. The internal memo indicated that the investigation was continuing but that a detailed account of its findings was unlikely to be released beyond “themes and lessons” learned.
“To protect the identity of those involved we cannot share details of this process. However, the board will look at the details, along with other feedback that is being collected from listening sessions currently taking place, and make sure that any themes and lessons are taken into consideration and adopted appropriately,” the memo read.
The internal and external search to appoint a permanent replacement for Looney is making “good progress”, the document said. “We will take the time the process needs to identify the best candidate to fulfil the role.” – Copyright The Financial Times Limited 2023
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