The pay of BP’s boss, Bernard Looney, ballooned to nearly £ 4.5m in 2021, after soaring energy prices transformed the company into a “cash machine”, reigniting calls for a windfall tax on oil companies.
Looney, who in February announced BP was selling its 20% stake in the Kremlin-controlled oil company Rosneft after coming under pressure from the UK government, enjoyed an inflated pay packet thanks to £ 2.4m in bonuses based on financial performance.
His reward was unveiled after the FTSE 100 firm reported its biggest profit in eight years. It booked profits of $ 12.8bn (£ 9.45bn) for 2021, compared with a loss of $ 5.7bn the year before, after cashing in on historic highs in the market price for gas and oil.
The same price increases, since aggravated by the war in Ukraine, have fueled a cost of living crisis for Britons. Household energy bills are predicted to reach as much as £ 3,000 a year and petrol prices as much as £ 2.40 a liter. A survey by the Office for National Statistics, the results of which were released on Friday, show that 83% of adults reported their cost of living had increased during February and March. The most frequently reported reasons were rising food shop prices (90%), rising energy bills (83%) and rising fuel prices (79%).
Labor has called on Rishi Sunak to introduce a windfall tax on the profits of oil and gas companies to help pay for policies to ease the cost of living crisis. The chancellor, who is due to give his spring statement next week, has so far rejected the idea.
A spokesperson for Greenpeace said Looney’s pay rise demonstrated BP’s ability to withstand such a tax and called on Sunak to implement one to “turbocharge” efforts to insulate homes, invest in renewables and install heat pumps.
“Big Oil bosses are taking home multimillion-pound paycheques while their companies are making billions from the soaring gas prices that are hurting so many households,” said a UK spokesperson.
“It’s clear that the UK government has missed a trick by not imposing a windfall tax on these bloated profits. The money could be used to fund a nationwide program to get our draughty homes off gas at the same time as helping people struggling with the cost of living crisis. “
Having received no bonus in 2020, the extra sum Looney received for 2021, together with an above-inflation £ 142,000 wage increase, meant that his total pay-and-perks deal rose to nearly £ 4.5m, compared with £ 1.7m in 2020 .
Luke Hildyard, director of the High Pay Center, said: “For a company of BP’s size it isn’t especially abnormal but there’s a debate to be had about whether such vast awards are necessary to reward or incentivise business leaders, when a pay package one thirtieth of the value would still be enough to put the recipient in the top 1% of UK earners.
“Outsize executive pay in business and finance is also a major cause of yawning inequalities in society. The BP CEO is paid over 200 times the salaries of the lowest earning quarter of his employees. “
He added that a quarter of BP’s UK staff are paid at least £ 126,000 each, which “rather invalidates the company’s claim that they can’t simultaneously pay a bit more tax on their windfall profits this year and invest in green energy.”
BP said his windfall had been adjusted to ensure that he was not simply benefiting from the effect of rising oil prices, which he has previously said have turned the company into a “cash machine”.
The award covers the year before Russia’s invasion of Ukraine, which has forced BP into promising to sell its 20% stake in Rosneft after the government expressed “concern” about the decade-old link.
Looney was one of two BP representatives on the Rosneft board, thanks to a 2013 deal that was announced at the company’s London headquarters by his predecessor, Bob Dudley, and Igor Sechin, widely seen as Vladimir Putin’s righthand man.
Before vowing to cut ties with Russia, Looney had also come under scrutiny for his role in the Russian Geographical Society, for which he received Putin’s personal thanks.
BP is expected to take a writedown of up to $ 25bn from its disposal of the Rosneft stake, with sanctions on Russia complicating its hopes of finding a buyer.