BP chief awaits dissent: Stockholders' meeting expected to be full of questions, grievances

BP Chief Executive Officer Bob Dudley

LONDON -- BP Chief Executive Officer Bob Dudley will face a tough audience at the oil company's annual meeting Thursday, with shareholders ready to air grievances about a year that started with the Gulf oil spill and is ending with missteps in Russia, a key BP market.

Safety and executive pay also are issues for the hundreds of shareholders expected to descend on the vast ExCel center in London.

They saw BP PLC lose a quarter of its market value, or some $55 billion, in the past 12 months, mostly as a result of the spill in the Gulf of Mexico.

The gathering coincides with the deadline for BP -- owner of a large chemical plant on the Cooper River, near Cainhoy -- to wrap up an $8 billion share swap with Russia's OAO Rosneft.

That deal has been blocked in court by BP's partners in an older Russian joint venture, TNK-BP.

Institutional investors will be pressing to find out how the Rosneft deal has gone wrong.

Others shareholders plan to lodge protest votes against the bonuses paid out to some key executives, and they are demanding more transparency on the company's plans to improve safety and get back on track.

It's a far cry from last year's event, when there were only minor protests against executive pay packets and opposition from environmental groups to BP's investment in the Canadian tar sands.

Then, just five days later, on April 20, BP's Macondo well blew out in the Gulf.

The explosion killed 11 workers and began the spill that has so far cost BP some $40 billion -- and former CEO Tony Hayward his job.

The biggest challenge for Dudley, the first American to lead the British oil company since taking over in October, is likely explaining the messy Rosneft deal.

BP announced the share swap with state-backed Rosneft to explore for oil and gas off the Russian Arctic continental shelf with much fanfare in January.

The deal was to cement BP's move forward from the Gulf spill. Instead, a quartet of Russian billionaires who are BP's partners in the TNK venture last week successfully challenged the deal. BP has sought an extension to Thursday's deadline to close the deal as it seeks an 11th-hour compromise.

However, a peace offering was looking increasingly unlikely Tuesday as a source close to TNK-BP's management said the company would seek up to $10 billion in damages from BP.

The source, who asked not to be identified because of the sensitivity of the issue, said the funds would be compensation for BP's violation of a shareholder agreement and failure to inform TNK-BP of an opportunity to explore the Russian sector of the Arctic.

Institutional investors may use Thursday's meeting as a public forum for their unhappiness.

Euan Stirling, investment director at Standard Life, told the BBC that the Rosneft deal was "another fine mess for BP."

Other investors are planning to vote against the re-election of the chairman and key executives and the acceptance of the annual report.

Both Pirc, the investor advice service, and the Association of British Insurers have issued warnings about excessive pay packages for two BP executives.

Iain Conn, the company's head of refining and Chief Financial Officer Byron Grote are receiving $505,000 and $621,000, respectively, for their performances not related to the oil spill.

Hayward also has grabbed headlines with a $17.9 million pension, a $1.6 million payoff and about $13 million in share options despite a series of public gaffes that led to his ceding the CEO post to Dudley.

Dudley has waived his bonus this year.

A coalition of institutional investors led by the U.S. Christian Brothers Investment Services, representing $12 billion in assets and 1 million shares in BP, also is unhappy with executive pay, and the company's lack of transparency over safety issues.

The group has said it will vote against the annual report, which it feels lacks sufficient detail on how BP has strengthened safety and risk management.