If you’re going to fall on your sword, it’s best if it’s gilt-edged.
Just ask departing BP boss Tony Hayward, who is in line for the sort of payout that would have most of us running into the nearest fencing shop to get the job done ASAP.
According to Robert Peston:
Tony Hayward will be able to draw a pension of around £600,000 a year from the moment he leaves the company on October 1, I have learned.
This is his contractual entitlement under the company’s pension scheme. The rules of the scheme say that those who joined it before April 6 2006 can take the pension at any point from age 50: Mr Hayward is 53.
However the pension entitlement is bound to be hugely controversial.
Mr Hayward’s pension pot had a transfer value on 31 December 2009 of £10.8m, and he had accrued a pension of £584,000 a year. The pension pot will be worth more than that by the time of his departure.
I happen to think that BP has done a reasonable job in the wake of the disaster, as I wrote when I prematurely considered BP shares good value at 435p. With the leak sealed, they’re finally inching back towards that. (Thanks Tony, for sparing my blushes!)
What’s more, I think Hayward’s main crime was to be British. They think he has a posh lar-dee-dah voice in the US, whereas to a British ear he just sounds like a geology lecturer from Warwick University.
True, he’s committed a few PR gaffs, but on a stage this big, who wouldn’t? And what do we care about – the problem being fixed or a clumsy word along the way?
Nevertheless I find it hard to stomach that any retiring employee should find themselves with a £600,000 a year pension. I have a convoluted theory for why it might not be quite as poor an outcome as it appears, but there still seems something morally suspect about it.
If it’s an entrepreneur who built his or her own business, that feels different.
Am I suffering from muddled thinking?
(Source: Peston/BBC)
{ 5 comments… read them below or add one }
Executive pensions! It’s Fred Goodwin all over again! A pension pot of £10m doesn’t sound /that/ excessive for 28 years of employment at what was the UK’s largest company by market cap, given that he worked his way to the very top. Compare it to any of the other figures in your average BP annual report and it looks insignificant (revenue, profit, value of oil leaked into the GOM).
@Lemondy – I think your last line hits the nail on the head… it really *is* Fred Goodwin all over again. In the same way banks boomed by carving a few percent out of trillions as the turnover of money escalated in the 1980s and 1990s, so executives have hidden their rewards in their booming company bottom lines. Yet I doubt BP is that different to run in practical terms from BP in 1980, say. (The ability to run it is surely bounded by a human being’s capacity, not the amount of potential work and skill required – and I don’t think executives have become astronomically smarter or harder working over the past 30 years).
Endlessly fascinating. I’ll share my theory of why I think it’s possibly not awful on Monevator soon!
Yessir. And all that growth came with regulatory capture, excessive operating risk, boom whoops we spilled our negative externalities all over your beaches. Same old, same old.
Tony Haywood was a convenient scapegoat. The bottom line is we all need oil, and we need companies like BP to provide it, something the likes of Greenpeace et al refuse to understand.
And unlike Fred Goodwin, Hayward’s pension is not been paid for by the taxpayer to a man who led his company to bankruptcy.
Well, looks like the bottom is in for BP shares now, touch wood. Alas still 20 pence below where I thought they looked good value!