British Petroleum

August 9th. 2006
Sent to but not published in the New York Times (Business Section)

Other lessons from Prudhoe Bay.

Over the past two years, the six executive Directors of BP received over $16 million dollars in Bonuses. These bonuses were paid on the basis of performance standards set by the Board's Remuneration committee. One way that high profit figures can be reached is by skimping on invisible but essential expensive tasks like maintenance (training and R&D are often early casualties too).

The failures of the pipelines in Alaska are clear evidence that BP undertook insufficient inspection and maintenance. At the very least, the Directors should hand back their bonuses and the Remuneration Committee should review the contingent, performance based pay of all officers of the Corporation and make appropriate adjustments.