BP shareholders yesterday backed the oil and gas company’s new pay policy and a move to cut the remuneration of chief Bob Dudley by 40 per cent after last year’s large-scale investor rebellion.<\/p>\n

More than 97 per cent of votes cast at BP’s annual meeting supported Mr Dudley’s $11.6m pay package for 2016 — down from $19m in 2015 — as well as a new three-year policy that cut bonuses and other remuneration.<\/p><\/blockquote>\n

So to sum up, Dudley who has delivered a mediocre performance this year, and horrendously in 2015 (BP stock crash) has just had his pay cut by $7.4 million. \u00a0The cut in his pay for one year is larger than what I will make my entire lifetime.<\/p>\n

Did Dudley quit? No. \u00a0Did he push back? \u00a0No. \u00a0So if he’s been there for say 5 years, the capitalists (pension funds and life insurance companies) have been ripped off $37 MILLION in dividends. \u00a0From the compensation of ONE executive.<\/p>\n

Now the title I used is somewhat misleading, this is not necessarily an issue with capitalism; more it’s an issue with corporate governance. \u00a0We can also add the reckless behaviour of money center banks during the housing mania. \u00a0Yes, the insanely low interest rates set by the Federal Reserve banking guild played a big part in that, but are you telling me not one money center bank had a board that was nervous?<\/p>\n

Now one problem is that our current tax system incentivizes bonuses through stock issuance to execs (let alone stock options), and a preference for capital gains over dividends. \u00a0As I mentioned in my book, I could not make any conclusions until after some common sense reforms were put in place: eliminate cash salary limits, tax capital gains at the same rate as other income, and make dividends paid out of profits tax free (the company already paid the corporate income tax on them). \u00a0Obviously such changes would make companies a lot more concerned about providing a steady, slowly growing dividend. \u00a0And that might be all that it would take.<\/p>\n

But today an executive is given stock, so he wants to see the stock price spike up, and investors don’t want dividends, they want capital gains. \u00a0Throw in cheap money from the Distributist banking system for stock buy backs, and you have the perfect storm. \u00a0That’s probably the problem right there.<\/p>\n

Still, looking at the Dudley example, where BP stock got creamed and he still got $19 million, I’m open to other problems (let’s not get sucked into a false dichotomy) with our current corporate governance model.<\/p>\n","protected":false},"excerpt":{"rendered":"

BP shareholders yesterday backed the oil and gas company’s new pay policy and a move to cut the remuneration of chief Bob Dudley by 40 per cent after last year’s large-scale investor rebellion. More than 97 per cent of votes cast at BP’s annual meeting supported Mr Dudley’s $11.6m pay package for 2016 — down…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"libsyn-item-id":0,"libsyn-show-id":0,"libsyn-post-error":"","libsyn-post-error_post-type":"","libsyn-post-error_post-permissions":"","libsyn-post-error_api":"","playlist-podcast-url":"","libsyn-episode-thumbnail":"","libsyn-episode-widescreen_image":"","libsyn-episode-blog_image":"","libsyn-episode-background_image":"","libsyn-post-episode-category-selection":"","libsyn-post-episode-player_use_thumbnail":"none","libsyn-post-episode-player_use_theme":"mini","libsyn-post-episode-player_height":"50","libsyn-post-episode-player_width":"200","libsyn-post-episode-player_placement":"top","libsyn-post-episode-player_use_download_link":"","libsyn-post-episode-player_use_download_link_text":"","libsyn-post-episode-player_custom_color":"","libsyn-post-episode-itunes-explicit":"","libsyn-post-episode":"","libsyn-post-episode-update-id3":"","libsyn-post-episode-release-date":"","libsyn-post-episode-simple-download":"","libsyn-release-date":"","libsyn-post-update-release-date":"","libsyn-is_draft":"","libsyn-new-media-media":"","libsyn-post-episode-subtitle":"","libsyn-new-media-image":"","libsyn-post-episode-keywords":"","libsyn-post-itunes":"","libsyn-post-episode-itunes-episode-number":"","libsyn-post-episode-itunes-season-number":"","libsyn-post-episode-itunes-episode-type":"","libsyn-post-episode-itunes-episode-title":"","libsyn-post-episode-itunes-episode-author":"","libsyn-destination-releases":"","libsyn-post-episode-advanced-destination-form-data":"[]","libsyn-post-episode-advanced-destination-form-data-enabled":"","libsyn-post-episode-advanced-destination-form-data-input-enabled":false,"libsyn-post-episode-premium_state":"","libsyn-episode-shortcode":"","libsyn-episode-embedurl":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[7],"tags":[10,11,12],"aioseo_notices":[],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.jamesdeprisco.com\/wp-json\/wp\/v2\/posts\/174"}],"collection":[{"href":"https:\/\/www.jamesdeprisco.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.jamesdeprisco.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.jamesdeprisco.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.jamesdeprisco.com\/wp-json\/wp\/v2\/comments?post=174"}],"version-history":[{"count":2,"href":"https:\/\/www.jamesdeprisco.com\/wp-json\/wp\/v2\/posts\/174\/revisions"}],"predecessor-version":[{"id":177,"href":"https:\/\/www.jamesdeprisco.com\/wp-json\/wp\/v2\/posts\/174\/revisions\/177"}],"wp:attachment":[{"href":"https:\/\/www.jamesdeprisco.com\/wp-json\/wp\/v2\/media?parent=174"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.jamesdeprisco.com\/wp-json\/wp\/v2\/categories?post=174"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.jamesdeprisco.com\/wp-json\/wp\/v2\/tags?post=174"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}