Pension Plans Challenge BP Exec's Comp Package

February 9, 2007 (PLANSPONSOR.com) - Two pension funds are expected to file suit in Alaska state court in an effort to get BP Plc to freeze a more than $140 million compensation package for its outgoing CEO as being too generous.

Taking the legal step were the pension plans of U.S. union group Unite Here and the London Pensions Fund Authority who are trying to get CEO John Browne’s retiree package held in a court trust until their lawyers work out disputes with BP over worker safety, Reuters reported. Reuters said it had been given a copy of the expected lawsuit to be filed by attorney William Lerach on behalf of the pension funds.

The new claims are trying to block Browne   from collecting what Lerach estimates at approximately $40 million in pension benefits and $54.5 million in long-term performance pay while the plaintiffs pursue their legal claims. The plaintiffs 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.

“We don’t think he should be able to walk away with that kind of money,” Lerach told Reuters, adding the board could withhold the pension payouts if it found Browne performed negligently.

Browne said on January 12 that he would step down at the end of July, 17 months earlier than planned, after a failed attempt to extend his tenure was opposed by the chairman, leading to uncertainty at the top of the third-biggest Western oil company.

U.S. regulators charged that he put cost-cutting before safety, contributing to an explosion that killed 15 at a Texas refinery.

The pension fund of Unite Here, a union representing apparel, textile, hotel and casino workers, and the London Pensions Fund Authority, a large local government pension scheme provider, sued Browne and the board in October over worker safety concerns.

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