BP Shareholders Force Major Governance Reforms
A coalition of shareholders have won major corporate governance improvements in the settlement of a shareholder action brought over the string of major safety environmental and operating disasters that have plagued BP, formally British Petroleum, the third largest global energy company.
The shareholder derivative action, filed in Alaska state court in October 2006, alleges negligent and intentional breach of fiduciary duties and waste of corporate assets by BP’s senior executives and Board of Directors by failing to properly fund and oversee safety and maintenance at BP’s U.S. operations. Representing shareholders in the action are UNITE HERE National Retirement Fund, representing American Depository Receipt holders; The London Pensions Fund Authority, a leading public fund in the U.K. representing common shareholders; and Jeffrey Pickett of Anchorage on behalf of BP Plc, BP America, Inc., BP Oil Company and BP Exploration (Alaska) Inc. (“BP”).
BP, a British energy company with global operations, admitted that its own operational oversight deficiencies contributed to a 2005 Texas City Refinery Explosion (resulting in over 15 deaths, over 170 injuries and the shutdown of the plant), the 2006 Prudhoe Bay Oil Spill (resulting in the discharge of over 200,000 gallons of oil and a temporary shutdown of most of BP’s Alaska pipeline), and propane market price-fixing. In addition to making these admissions, BP agreed to pay $373 million in fines.
The settlement provides for significantly improved corporate governance and oversight at BP’s worldwide operations, especially those in the U.S. BP also agreed to withdraw a portion of ex-CEO Lord John Browne’s multimillion-dollar severance package and implement unprecedented reforms in tying executive compensation to the company’s health and safety record.
The terms reached in the settlement require BP to: (1) hold annual meetings with members of the 20 largest shareholders – including investors of American Depository Receipts; (2) include BP’s operational health, safety and environmental performance in the principles used to calculate performance pay to executives; and (3) improve shareholder access to company management by broadcasting the annual shareholder meeting on the Internet. The trial court is reviewing the terms and will rule on final approval in May.
“The settlement of this shareholder suit demonstrates the incredible power of alert and energetic institutional investors. The actions of these shareholders have resulted in critical corporate governance improvements that will ultimately benefit both BP and its investor-owners,” said Coughlin Stoia attorney Mary K. Blasy.
UNITE HERE Nat’l Ret. Fund, et al. v. The Lord John Browne of Madingley, et al., No. 3AN-06-011929 (Alaska Super. Ct.).
Read More Firm News
- Robbins Geller Partners Aelish Baig and Jessica Shinnefield Recognized as “Born Leaders” and Plaintiffs’ Lawyers Trailblazers by The National Law JournalMay 4, 2021
- Robbins Geller Secures Appellate Win After Supreme Court of New York Appellate Division Affirms Denial of Motion to Dismiss in Securities Class Action Against Alnylam Pharmaceuticals, Inc.April 30, 2021
- April 29, 2021
- April 22, 2021
- April 21, 2021