BP seeks to reassure investors over tax bill
14/04/2005 - 14:48:06Oil giant BP today sought to reassure investors that it was not becoming embroiled in a stand-off with Russian authorities over a $1bn (€782.2m) tax bill.
Speaking at the group’s annual meeting in London, chairman Peter Sutherland said the company was not “unduly perturbed” by the claim which affects its 50-50 joint venture TNK-BP.
The bill spooked the market this week as it appeared to echo a bitter dispute over unpaid taxes between the Kremlin and Russia’s largest oil producer Yukos.
It also followed a new law in Russia that prevents companies with a majority of overseas investors from taking part in auctions for strategic energy fields.
The TNK-BP joint venture is a key investment of the company as traditional oilfields in Alaska and the North Sea decline, and helped profits to hit a record £8.7bn (€12.8bn) in 2004 – equivalent to £1m (€1.5m) an hour.
Mr Sutherland said the tax issue was not one that was causing great concern, adding: “We are quite satisfied with the manner in which the affairs of TNK-BP is run.”
BP were also pressed by shareholders on its decision to hand chief executive Lord Browne a £5.65m (€8.3m) pay package for last year – up from £4.8m (€7.1m) in 2003.
One investor dubbed the pay award “obscene” because the company had benefited from a surge in oil prices to record levels.
Duncan Reid, a private shareholder, said: “I find it difficult to accept that the remuneration of Lord Browne is three times (higher than) everybody else (on the board).”
Pension and Investment Research Consultants (PIRC) an organisation that represents shareholders, had recommended opposing the structure for rewarding BP executives on the grounds that it led to “excessive” awards and trade unions have also expressed their anger.
But not all shareholders were unhappy with the pay package of Lord Browne and 98.5% of votes received ahead of the meeting were in favour.
One investor said: “I suggest we stop whinging about Lord Browne’s pay packet, remembering what the value of our shares were and what they are today.
“Much of that difference is due to his stewardship and management skills.”
BP has defended its remuneration policy as vital to attracting high calibre staff who might otherwise be tempted to join overseas rivals whose executive pay levels are even higher.
The meeting also heard that BP was continuing to work with American authorities to investigate last month’s blast at its biggest US refinery which killed 15 people.
In his speech to investors, Lord Browne described his visit to the site in Texas the day after the explosion and fire as the “most moving in his entire career at BP”.
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