You are here
LONDON -- BP cut the bonus of John Browne, its departing chief executive, almost in half for 2006, a year when the company reported record earnings, but faced accusations that cost-cutting led to safety lapses at a plant in Texas.
Browne, who will step down in July, more than a year ahead of schedule, received a performance bonus of £900,000 ($1.74 million) for last year, down from £1.75 million for 2005, BP said in its annual report.
His total compensation fell 28 percent, to £4.57 million ($8.8 million), from £6.36 million. His salary rose 5.5 percent, to £1.53 million, from £1.45 million. Tony Hayward, chief executive of BP's exploration and development unit, who will succeed Browne, was paid a bonus of £250,000 for last year, down from £460,000 in 2005, according to a report in The New York Times.
BP's compensation committee said the lower bonuses were a result of considering "broader qualitative factors," including reviews of operational and safety issues in the American division. An explosion at BP's Texas refinery in 2005 killed 15 people and led to investigations about how the company was dealing with health and safety issues.
A report released in January by former Secretary of State James A. Baker III concluded that the type of leadership at BP and a lack of attention to safety created an environment that made the accident possible. Browne, who was not singled out in the report, denied any problems with BP's structure but said he would work to improve the company.
BP, based in London, also said on Tuesday that it had received grand jury subpoenas in a federal investigation of the Texas explosion, according to The New York Times.
The Occupational Safety and Health Administration referred the case to the Justice Department, which is now looking into whether there was criminal conduct in connection with safety lapses at the refinery, according to the newspaper report.
BP has said that it will spend $200 million to pay for 300 external experts to conduct audits and handle redesigns at the plant and that it set aside $1.6 billion to cover legal claims from victims of the blast, which also injured 170 people.
The explosion was one of several problems for BP in recent years. The company faced a Justice Department inquiry over the management of its Prudhoe Bay complex in Alaska. In addition, BP traders were accused of manipulating the propane markets in 2004.
Browne will continue to receive BP shares over the next three years.