BP 2013 Annual Report Download - page 24

BP Annual Report and Form 20-F 201320
A simple approach
Total remuneration is determined by a relatively simple approach
to attract and retain high calibre executives. The largest components
are share based and vest over a number of years – further aligning
executives’ interests with those of our shareholders.
Underpinned by six key principles
The remuneration policy for executive directors and
the decisions of the remuneration committee of the
board are guided by six key principles:
Our approach to executive
directors’ remuneration
Remuneration is directly linked to strategy and performance, with
particular emphasis on matching rewards to results over the long term.
Recognizes
competitive practice
in home country.
Reflects scale
and dynamics of
the business.
Variable level
dependent on
short-term
performance.
Reinforces the long-term nature
of the business and the importance
of sustainability, and links more
total remuneration to equity.
Links the largest portion of remuneration to
long-term performance, with the level awarded
varying according to performance based on
measures directly linked to strategic priorities.
Pension and
benefits
Annual
bonus
Deferred
bonus
Performance
shares
Salary
1 Linked to strategy
Operating cash flow
Total shareholder return
Reserves replacement ratio
Major project delivery
Recordable injury frequency
Loss of primary containment
Tier 1 process safety events
Underlying replacement cost profit
A substantial portion of executive remuneration
is linked to success in implementing the
company’s strategy.
Strategic priorities and group key performance
indicators (KPIs) provide key metrics for the
performance shares and deferred bonus, and are
focused through the annual plan to provide the
measures for annual bonus.
Group KPIs used as performance
measures
KPIs
See page 18.
Strategy
See page 13.
2 Performance related The major part of total remuneration varies with
performance, with the largest elements share
based, further aligning interests with
shareholders.
High pay requires high performance. Achieving
the maximum pay requires sustained high
performance over several years.
Performance
Pay
Sustained performance
Min Target Max
Directors’ remuneration report
See bp.com/remuneration
and page 81.