BP faces pressure from world’s biggest investor proxy voting firms ahead of AGM

Influential advisors take oil major to task over remuneration and safety.

Oil giant BP is facing pressure on pay and safety from two of the world’s biggest shareholder voting advisory firms, Glass, Lewis & Co. and ISS, ahead of its annual general meeting (AGM) next month.

It’s the first concrete sign of AGM action by the institutional investor community against BP in the wake of the Deepwater Horizon oil spill disaster in the Gulf of Mexico last year, despite the fact that there is no resolution relating to the incident on the AGM agenda.

A planned shareholder resolution calling for BP to assess its operations in the wake of the Deepwater catastrophe was dropped in January.
Market sources have suggested to Responsible Investor that there’s little appetite amongst institutional investors to ‘kick a man while he’s down’. They argue that BP should be given time to deal with all the issues stemming from the Gulf of Mexico disaster.
But now Glass Lewis is recommending that its clients – who collectively control more than $17trn in assets – vote against BP’s Annual Report & Accounts, the top item on the AGM agenda.

ISS, the Institutional Shareholder Services arm of index firm MSCI, is suggesting that its clients abstain from approving the company’s remuneration report.

And Glass Lewis is recommending voting against the re-election of certain members of BP’s Safety, Ethics & Environmental Assurance Committee (SEEAC).

The firm, a subsidiary of Canadian pension fund the Ontario Teachers’ Pension Plan Board, suggests voting against the committee’s chairman Sir William Castellsand fellow committee members Antony Burgmans and Cynthia Carroll. ISS is suggesting clients abstain on Castells’ reappointment.
The proxy firms’ advice comes as media reports over the weekend in the UK cited unnamed institutional investors saying they were considering voting against the company’s remuneration report and the re-election of Chairman Carl-Henric Svanberg at the AGM.
One big UK house, F&C Investments, in its 2010 Responsible Investment Report, said the “2011 BP AGM will effectively be a vote of confidence in the response of company directors, in particular the Chairman”.

F&C has already abstained on the ratification of the board of Deepwater Horizon rig operator Transocean and on the election of the audit committee chairman at BP’s project partner Anadarko.
According to the Proxy Democracy website, the Florida State Board of Administration, which oversees around $145bn in assets, is to vote against the company’s plan to amend its ShareMatch and Sharesave employee share plans.
Responsible Investor understands that recommendations from PIRC, Pensions & Investment Research Consultants Ltd, are due shortly. Amid all this activity, BP has invited socially responsible investors to a seminar in London on May 12 to go over developments since Deepwater.
The AGM takes place in London on April 14.