Oil company drops ex-CEO's bonus

Story highlights

  • Cairn Energy says shareholders' comments played a role in the decision
  • Several large shareholders objected to not being consulted, news reports say
  • They also said the work being rewarded was a normal part of a CEO's job, the reports say
After pressure from shareholders, Scottish oil firm Cairn Energy has withdrawn a multimillion-dollar bonus for its former CEO.
Cairn said on January 10 its board would recommend Bill Gammell, now its non-executive chairman, receive share awards worth around $3.9 million for his work to successfully sell a controlling stake of the company's India assets in 2011.
Investors were expected to vote on the remuneration recommendation at the company's general meeting at the end of January.
In an announcement Tuesday to the London Stock Exchange, Cairn said it was withdrawing the bonus after it "noted the comments received from several institutional shareholders and their representative bodies in connection with the proposed share award."
Local media reports say some large institutional shareholders objected to a bonus for what is seen as the normal duties of a CEO and for not being consulted before the proposal was made public.
The withdrawal came one day after the British Parliament debated executive pay. The government is looking at ways to give shareholders more control over executive pay and bonuses in light of the recent economic crisis.
Cairn shares closed down 3.4% in London trading Tuesday.