Optimising BP CEO’s Pay

Posted on: 14th April 2016

By Wolrad Claudy, CCO at Aria Networks

The headlines about the remuneration of BP’s CEO Bob Dudley illustrate the challenge of finding an optimum solution to a business problem. And there’s a direct line to the day-in-day-out challenges of companies who deliver content-based services.

Just what is the best solution? That depends on your perspective.

It’s reasonable to think that Bob wants what is best for him. He’s going to look for the optimal solution on a personal basis.

Then there’s the company, and its finance leadership. They’re looking at cash flow, future liabilities, contracts, sales, profits and bunch of other parameters. They’ll be looking to optimise from an affordability perspective. What can we actually afford to pay Bob?

And then there’s the shareholders. They’ll be taking a long term view, doing a lot of “what if” thinking. What if Bob leaves? What if the company has another disaster? What if another oil giant CEO becomes available?

And all of this in the context of a market that is undergoing dramatic swings in the value of its product over time.

This is the challenge of finding an optimum solution. One that balances low-level and high-level needs. One that factors in and weighs up many different possibilities. One that tries to predict the future – or at least possible scenarios – and make a judgement call.

Exactly the same challenge is faced by businesses delivering content-based or communications services. Figuring out how best to configure things for the best business outcome. Only it’s not the CEO’s salary – it’s all of the resources they use to deliver video. Or data traffic. Or voice comms.

And it’s not a once-a-year event – it’s day by day, hour by hour, minute by minute.

But the question is the same: what’s optimal for the business? And how do we feed in all the different factors to do that? In BP’s case – there’s a remuneration committee. But service providers will likely need something rather more scalable.