Investors want pay freeze for BP's outgoing CEO

Two pension funds plan to ask an Alaska state court to freeze more than $140 million in retirement pay and other compensation for outgoing BP Plc CEO John Browne, saying it is excessive and undeserved, an attorney for the investors said.

The expected court action, a draft of which was given to Reuters, comes as investors are becoming increasingly vocal over what they see as runaway pay for chief executives.

In the case of BP, the shareholder plaintiffs want Mr Browne's pension fund to be held in a court-supervised trust while they pursue claims against him and the board of directors for environmental and worker safety issues that have beset the oil company.

"Browne is now, it appears, being pushed out of the company but taking with him upward of God knows how many millions and millions of dollars of severance and pension payments," said William Lerach, a prominent US class-action lawyer who represents the pension plan of US union group Unite Here and the London Pensions Fund Authority in the case.

"We don't think he should be able to walk away with that kind of money," Dr Lerach said. He said the BP board could withhold the pension payouts from Mr Browne if it found that the CEO performed negligently.

A BP spokesman said the company does not comment on legal matters or court actions.

Mr Browne announced on January 12 that he would step down at the end of July, a year-and-a-half earlier than planned.

For many years he was considered a visionary CEO with a strong environmental record, but recent problems in the United States, including fatal accidents at a Texas refinery and maintenance issues at an Alaskan oil pipeline, have dented his image.

The pension fund of Unite Here, a union representing apparel, textile, hotel and casino workers, and the London Pensions Fund Authority, one of the largest UK retirement systems for local government workers, sued Mr Browne and the board in October.

The lawsuit accused them of reckless conduct in overseeing environmental and labour matters and said their actions harmed shareholders.

The new claims, according to estimates compiled by Dr Lerach's law firm, seek to temporarily bar Mr Browne from collecting approximately $40 million in pension benefits and $54.5 million in long-term performance pay while the plaintiffs pursue their claims. They also want the court to freeze about $30.7 million in stock options and want about $18.3 million in previously awarded cash bonuses to be returned and put into the trust.

The plaintiffs also said they want BP to give them a "detailed accounting" of Mr Browne's pay figures so they can calculate the exact amount of his total compensation, according to the draft court papers.

Executive pay, long a contentious issue, has galvanised shareholder activists, their anger stoked by recent disclosures that ex-Home Depot Inc. CEO Robert Nardelli and former Pfizer Inc. CEO Hank McKinnell would get exit packages valued at about $200 million apiece.

The issue is also a hot topic in Washington, DC, where Democrats are calling for pay reform, while President George W. Bush has said pay for CEOs "should be based on their success at improving their companies".

Dr Lerach's firm, Lerach Coughlin Stoia Geller Rudman & Robbins LLP of San Diego, California, and other shareholders' attorneys have had success recently in getting a freeze on the compensation of UnitedHealth Group Inc. former CEO William McGuire.

Late last year, a federal judge in Minnesota temporarily blocked Mr McGuire from collecting his company pension or exercising stock options while the health insurer sorts out potential legal claims stemming from a probe into options awards to Mr McGuire and other executives.