BP 2012 Annual Report Download - page 147

Corporate governance
Corporate governance
BP Annual Report and Form 20-F 2012
145
Policy
The board sets the level of remuneration for all non-executive directors
within a limit approved from time to time by shareholders. Key elements
of BP’s policy on non-executive director remuneration include:
t Remuneration should be sufficient to attract, motivate and retain
world-class non-executive talent.
t Remuneration of non-executive directors should be proportional to their
contribution towards the interests of the company.
t Remuneration practice should be consistent with recognized best
practice standards for non-executive directors’ remuneration.
t As a UK-listed company, the quantum and structure of non-executive
director remuneration will primarily be compared against best UK
practice.
t Remuneration should be in the form of cash fees, payable monthly.
t Non-executive directors should not receive share options from the
company.
t Non-executive directors are encouraged to establish a holding in BP
shares of the equivalent value of one year’s base fee.
t Remuneration for non-executive directors is reviewed annually.
Process
BP reviews the quantum and structure of chairman and non-executive
remuneration on an annual basis. The chairman’s remuneration is
reviewed by the remuneration committee, which makes a
recommendation to the board; the chairman does not vote on his own
remuneration. Non-executive director remuneration is reviewed by the
chairman, who makes a recommendation to the board; non-executive
directors do not vote on their own remuneration.
The review of non-executive remuneration undertaken in 2012
benchmarked the structure and fees of BP non-executive directors against
the ten largest companies by market capitalization in the FTSE100. The
review concluded that fee levels, which had not been increased since
2007, had fallen below the comparator group and changes were made to
the following fee elements:
t Increase in the basic board member fee from £75,000 to £90,000.
t Increase in committee membership fees from £5,000 to £20,000.
t Increase in the remuneration committee chairmanship fee from
£20,000 to £30,000.
All other fees remained unchanged.
The review also concluded that the company should be willing to
reimburse professional fees up to £5,000 per annum incurred by
non-executive directors based outside the UK in connection with advice
and assistance on UK tax compliance matters.
Fee structure
The table below shows the fee structure for non-executive directors from
1 October 2012:
Fee level
£ thousand
Chairmana750
Senior independent directorb120
Board member 90
Audit, Gulf of Mexico, remuneration and safety,
ethics and environment assurance committees
chairmanship feesc
30
Committee membership feed20
Intercontinental travel allowance 5
a The chairman remains ineligible for committee chairmanship and membership fees or
intercontinental travel allowance. He has the use of a fully maintained office for company
business, a chauffeured car and security advice in London. He receives secretarial support as
appropriate to his needs in Sweden.
b The senior independent director is still eligible for committee chairmanship fees and
intercontinental travel allowance plus any committee membership fees.
c Committee chairmen do not receive an additional membership fee for the committee they chair.
d For members of the audit, Gulf of Mexico, SEEA and remuneration committees.
2012 remuneration (audited)
All fees in £ thousand Total fees
2012 2011
Carl-Henric Svanberg 750 750
Paul Anderson 149 128
Admiral Frank Bowman 126 120
Antony Burgmans 120 100
Cynthia Carroll 98 85
George Davida135 128
Ian Davis 128 160
Professor Dame Ann Dowlingb c 97 –
Brendan Nelson 119 103
Phuthuma Nhleko 123 113
Andrew Shilstond125 –
Director leaving the board in 2012
Sir William Castelle42 168
a In addition, George David received £28,000 for chairing the BP technology advisory council.
b Appointed 3 February 2012.
c In addition, Professor Dowling received £4,166 for her membership of the BP technology
advisory council.
d Appointed 1 January 2012 and became senior independent director in April 2012.
e Retired from the board in April 2012.
No share or share option awards were made to any non-executive director
in respect of service on the board during 2012.
Non-executive directors have letters of appointment that recognize that,
subject to the Articles of Association, their service is at the discretion of
shareholders. All directors stand for re-election at each AGM.
Past directors
Sir Ian Prosser (who retired as a non-executive director of BP in April
2010) was appointed as a director and non-executive chairman of BP
Pension Trustees Limited in 1 October 2010. During 2012, he received
£100,000 for this role.
Peter Sutherland (who was chairman of BP until 31 December 2009)
continued his membership of the BP international advisory board after his
retirement from the board of BP p.l.c. During 2012, he received €100,000
for this role.
This directors’ remuneration report was approved by the board and signed
on its behalf by David J Jackson, company secretary on 6 March 2013.
Non-executive directors’ remuneration