BP’s top brass suffered a shareholder revolt yesterday in the latest blow to a once-mighty corporate titan that is now standing at a crossroads.
Chairman Helge Lund was dealt a bloody nose as a quarter of shareholders opposed his re-election – the oil giant’s biggest protest vote in nearly a decade.
And while chief executive Murray Auchincloss received the backing of 97 per cent of investors – suggesting his position is safe for now – his long-term future hangs in the balance.
The pivotal investor meeting at BP’s headquarters in Surrey came as it grapples with an identity crisis.
Auchincloss is hoping to convince the shareholders that his new strategy can boost the oil major’s languishing valuation.
The FTSE 100 energy major’s share price has lagged behind peers since it aggressively pivoted to renewables under former boss Bernard Looney.
Green drain: BP’s share price has lagged behind peers since it aggressively pivoted to renewables under former boss Bernard Looney
That has left it scrambling to change course – and vulnerable to a takeover.
Arch-rival Shell and US oil giants Chevron and Exxon Mobil have been touted as potential buyers.
A deal would be a devastating blow to both the 124-year-old company and London’s stock market.
BP can trace its roots back to 1901 when British businessman William Knox D’Arcy was granted an exploration licence in Iran, then known as Persia. The company discovered oil seven years later.
Initially known as the Anglo-Persian Oil Company, the firm was renamed British Petroleum in 1954.
And the 1970 discovery of an oil field in the North Sea fuelled BP’s stratospheric rise to the top.
But 25 years ago, former chief executive Lord Browne, who was dubbed the ‘Sun King’, rebranded BP as ‘Beyond Petroleum’.
Browne was heralded for overseeing rapid growth during his 12 years, but the move set BP on course to pursue a green agenda.
He was forced to resign in 2007 after lying in court and his short-lived successor Tony Hayward stepped down after the Deepwater Horizon disaster in 2010.
He and BP were heavily criticised for a string of PR gaffes as oil spewed into the Gulf of Mexico, with Hayward at one point saying: ‘I would like my life back.’
Bob Dudley took the helm with BP in crisis but a turnaround was well under way by his retirement in 2020.
It was then that Lund hired Irishman Looney – and the business seemingly lost its way. Looney vowed to cut oil production by 40 per cent, a target later reduced to 25 per cent.
All oil firms are grappling with the realities of climate change and a transition to renewables such as solar power and wind farms. But debate has raged on how fast and far to go.
The response from investors was that Looney had got it wrong.
Auchincloss scrapped the targets this year after pressure from investors including activist Elliot Advisers, which has a 5 per cent stake.
But yesterday’s bad-tempered annual general meeting suggested shareholders have not been placated.
Some 24.3 per cent voted against Lund, the biggest protest against a FTSE 100 company for five years and the largest at the oil giant since 2016 when 59pc opposed Dudley’s pay.
The AGM saw heavy security in place to prevent protests from climate change activists.
And Lund faced a fiery audience that wanted answers. He took questions over whether he was overstretched given he is also chairman of Novo Nordisk and an adviser to private equity giant Clayton, Dubilier and Rice.
In a bid to assuage shareholder anger, Lund this month said he would stand down as BP chairman next year.
But the scale of the revolt underlines the level of investor unrest. Industry observers now believe Lund’s departure will have to be accelerated.
Amanda Blanc, who is BP’s senior independent director in charge of finding Lund’s replacement, said: ‘The succession process is under way. It needs to be comprehensive and swift. It is the utmost priority.’
Lund said: ‘I have dedicated lots of time to BP and always had dialogue with investors.’
In February BP announced a ‘fundamental reset’ to focus on oil and gas to improve its cash flow and shareholder returns. At the meeting yesterday, Auchincloss insisted that decision was right and said it had been wrong to turn to renewables.
He said: ‘In 2020 we took bold strategic decisions. We were optimistic for that transition but that optimism was misplaced.
‘We went too far, too fast. Looking forward we intend to close the valuation gap with our peers by growing the upstream and structurally reducing costs.’
But investors were unimpressed, demanding to know when performance will be turned around.
One questioned whether BP’s future lay in the US and not on the London Stock Exchange where the share price has fallen 13 per cent in the past year, compared with a fall of 5 per cent for rival Shell.
They asked: ‘Has the company missed an opportunity here?’
In the last five years, BP’s share price has risen around 18 per cent, valuing it at £57billion. Shell’s shares have risen more than 77 per cent since 2020 and it is now worth £145billion.
And US firms Exxon Mobil, worth £350billion, and Chevron, worth £180billion, have soared after doubling down on fossil fuels.
Auchincloss is faced with a turbulent oil market rocked by the return of Donald Trump to the White House.
He has pledged to ‘drill baby, drill’ to grow American oil and gas production by 3m barrels a day by 2028 to bring the price of oil down as low as $50 a barrel.
But industry estimates suggest US producers need a price of at least $65 a barrel to drill wells and make a profit. Global benchmark Brent Crude dipped below $60 last week for the first time in four years amid tariff fears.
Allen Good, director of research at Morningstar, said: ‘If oil prices weaken materially, BP could become a [takeover] target, given its higher debt level will leave it exposed.’
And Paul Sankey, an independent oil analyst, said the company is ‘a break-up candidate’. ‘The new chairman needs to be an outsider,’ he said, adding energy veteran Greg Goff was a favourite.
Danni Hewson, head of financial analysis at AJ Bell, said: ‘The scale of the challenge facing the board is painfully clear.
‘Speculation is already building that some kind of merger or takeover could be on the cards.’
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