British oil company BP (BP.L) has significantly reduced former CEO Bernard Looney’s compensation by over $40 million. This decision came after BP determined Looney had not been fully honest with the board about personal relationships with colleagues.
Looney was let go immediately on December 13th, and BP announced he would not receive any more salary or benefits from that date, nor would he get a bonus for 2023. This action effectively ends Looney’s one-year notice period, which began after his resignation in September due to not disclosing details of past personal relationships at work.
Looney’s sudden exit, after less than four years leading BP, has caused disruption within the company, and the search for his successor is ongoing.
The board reduced Looney’s pay package by £32.4 million ($40.53 million), primarily because of his resignation, with additional reductions due to his dismissal for serious misconduct and other adjustments made by the board.
The Ex-CEO expressed disappointment in how the situation was managed. BP’s Chairman Helge Lund, with assistance from Fairfields law firm, is investigating whether Looney’s undisclosed relationships violated company policies.
The largest part of the cut, about £25 million, was due to the Ex-CEO losing future share awards from 2021 to 2025. He must also return half of his 2022 cash bonus, around £420,000.
This decision follows a previous investigation into similar allegations against Looney in May 2022, after which he assured the board about his past and future behavior. However, BP later found that Looney had misled them in July 2022 with his assurances.
In 2022, Looney’s pay reached around $12 million, boosted by high energy prices driving record profits for oil and gas firms.
After his resignation, BP appointed Murray Auchincloss, the finance head under Looney, as interim CEO. A permanent CEO is expected to be chosen in early 2024.
Executive pay cuts due to misconduct are not uncommon in major corporations. For example, Wells Fargo reduced CEO John Stumpf’s compensation by $41 million in 2016 after a scandal, and McDonald’s ex-CEO Steve Easterbrook returned $105 million to settle a lawsuit over alleged dishonesty regarding personal affairs.