BP unveils first-ever employee share award plan
Oil major BP is launching a first-ever share award scheme to more than 60,000 employees as the company continues transitioning towards a greener future.
This can be perceived as BP’s attempt to “rally the troops” around CEO Bernard Looney’s plan to shift to renewable energy following a year of mass layoffs, bonus suspensions, and spending cuts.
According to an article by Reuters, the distribution of the shares, which will be locked for four years, will take place throughout 2021.
The cost of the program was not yet clear, but BP said it would not impact its $2.5 billion cost-savings target or plans to reduce debt to $35 billion this year.
Reuters stated that Looney held a company-wide “town hall” meeting last Tuesday where he announced that all employees would receive shares, the first such program in BP’s history.
“Whether you are a barista in New Zealand, a drilling engineer in Azerbaijan, a pump clerk in South Africa or an analyst in India – over 60,000 people in 66 different countries will receive a share in BP’s future”, Looney said in an internal message that followed the meeting.
The London-based company’s shares have risen nearly 10 per cent so far this year, lifted by stronger crude oil prices. But over the past year since Looney took office, the shares have lost nearly 40 per cent, hitting a 26-year low in October, due to a collapse in energy prices and an unenthusiastic reception from investors to his plan to “reinvent” the 111-year-old company, shifting it away from oil to wind and solar power.
Last year was one of the toughest in the industry’s history, and for BP in particular. The company plunged into a $5.7 billion loss – first in a decade – after it slashed the value of its oil and gas assets by nearly $20 billion.
BP also laid off around 10,000 employees, or roughly 15 per cent of its global workforce, as part of Looney’s plan to increase renewable power capacity 20-fold by 2030 while reducing its oil output by 40 per cent in a drive to cut greenhouse gas emissions by 2050.
It is worth noting that BP intends to offset any shareholder dilution that may result from the plan as employees will not be able to sell the shares before 2025.
While most employees will get outright shares, around 5,000 mid-management and senior employees will receive share options, which means that at the end of the vested four-year period they will only be entitled to receive gains made by the shares.
BP is also expected to return to paying bonuses to around 30,000 employees for 2021 after suspending all bonuses last year in response to the collapse in energy prices due to coronavirus.