BP 2013 Annual Report Download - page 103

Corporate governance
BP Annual Report and Form 20-F 2013 99
• Salaryincreasesarenotdirectlylinkedto
performance. However a base-line level of
personal contribution is needed in order to be
considered for a salary increase and exceptional
sustained contribution may be grounds for
accelerated salary increases.
No change to policy.
• Specicmeasuresandtargetsaredetermined
each year by the remuneration committee.
• A proportion will be based on safety and
operational risk management and is likely to
include measures such as loss of primary
containment, recordable injury frequency and
tier 1 process safety events.
• Theprincipal measures of annual bonus will be
based on value creation and may include financial
measures such as operating cash flow,
replacement cost operating profit and cost
management, as well as operating measures
such as major project delivery, Downstream net
income per barrel and Upstream unplanned
deferrals. The specific metrics chosen each year
will be set out and explained in the annual report
on remuneration.
No change to policy.
• Bothdeferredandmatchedsharesmust
pass an additional hurdle related to safety and
environmental sustainability performance in
order to vest.
• Iftherehasbeenamaterialdeteriorationin
safety and environmental metrics, or there have
been major incidents revealing underlying
weaknesses in safety and environmental
management then the committee, with advice
from the safety, ethics and environmental
assurance committee, may conclude that shares
vest in part, or not at all.
• Alldeferredsharesaresubjecttoclawback
provisions if they are found to have been granted
on the basis of materially misstated financial or
other data.
Introduction of an additional three-year
retention period on matched shares that
vest. This results in a six-year plan, the
same as for performance shares.
• PensionintheUKisnotdirectlylinkedto
performance.
• PensionintheUSincludesbonusindetermining
benefit level.
No change to policy.
• Performanceshareswillvestonthefollowing
three performance measures:
– Total shareholder return relative to other
oil majors.
– Operating cash flow.
– Strategic imperatives.
• Measuresbasedonrelativeperformancetooil
majors will vest 100%, 80%, 25% for first,
second and third place finish respectively and
0% for fourth or fifth position.
• Thecommitteeidentiesthespecicstrategic
imperatives to be included every year and may
also alter the other measures if others are
deemed to be more aligned to strategic priorities.
These are explained in the annual report on
remuneration.
• Thecommitteemayexercisejudgementtoadjust
vesting outcomes if it concludes that the formulaic
approach does not reflect the true underlying
performance of the company’s business or is
inconsistent with shareholder benefits.
• Allperformancesharesaresubjecttoclawback
provisions if they are found to have been granted
on the basis of materially misstated financial or
other data.
Override provision extended requiring
high levels of vesting to be consistent
with shareholder benefit.
More stringent vesting schedule for
those metrics that are measured on
performance relative to the other four
oil majors. Third place finish reduced
from 35% to 25% and second place
increased from 70% to 80%.
Performance framework Changes to policy