BP 2014 Annual Report Download - page 82

2011 deferred bonus vesting
Name
Shares
deferred
Vesting
agreed
Total shares
including
dividends
Total
value
at vesting
Bob Dudley 436,824 100% 505,782 $3,401,384
Iain Conn 322,608 100% 380,785 £1,698,301
Dr Brian Gilvary participated in a separate deferred bonus plan prior to his
appointment as an executive director and details of this are provided in the
table on page 84.
Details of the deferred bonus awards made to the executive directors in
early 2014, in relation to 2013 annual bonuses, were set out in last year’s
report. A summary of these awards is included on page 84.
2015 implementation
The committee has determined that the safety and environmental
sustainability hurdle will continue to apply to shares deferred from the 2014
bonus. All matched shares that vest in 2018 will, after sufficient shares
have been sold to pay tax, be subject to an additional three-year retention
period before being released to the individual in 2021. This further
reinforces long-term shareholder alignment and the nature of the group’s
business. Both Bob Dudley and Dr Brian Gilvary deferred two thirds of their
2014 annual bonus.
2014 outcomes
Both Bob Dudley and Iain Conn deferred two thirds of their 2011 annual
bonus in accordance with the terms of the policy in place at the time of
deferral.
The three-year performance period concluded at the end of 2014. The
committee reviewed safety and environmental sustainability performance
over this period and sought the input of the safety, ethics and environment
assurance committee (SEEAC). Over the three-year period 2012-2014
safety measures showed steady improvement. All performance hurdles
were met and the group-wide operating management system★ is now
sufficiently embedded throughout the organization to continue driving
improvement in environmental as well as safety areas.
Following the committee’s review, full vesting of the deferred and matched
shares for the 2011 deferred bonus was approved, as shown in the
following table (as well as in the single figure table on page 75).
Deferred bonus
Reinforces the long-term nature of the business and the importance of sustainability, linking a further part of remuneration to equity.
Policy summary
Operation and opportunity
 the annual bonus is required to be deferred and up to a further third can be deferred voluntarily. This deferred bonus is awarded in shares.
 
the committee of safety and environmental sustainability over the three-year period.
 
 
retention period.
Performance framework
 
 
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.
 
2015 implementation
For 2015, 100% of Bob Dudley’s and Dr Brian Gilvary’s bonus will be
based on group results.
The 2015 bonus plan has been set in the context of recent group
achievements (delivery of the 10-point plan), current short-term
imperatives and the group’s strategy. The committee will continue to focus
on the two overall themes of safety and value. In order to focus on
priorities of the short term, the number of value measures has been
reduced from six in 2014 to five in 2015. The measures reflect the current
short term imperatives and tie back to the 2015 priorities in the group’s
annual plan. Targets for each measure are challenging but realistic and have
been set in the context of the current environment.
Continued improvement in safety remains a group priority and is fully
reflected in the measures. Safety will continue to have a 30% weight in the
overall bonus plan. The value measures are now more heavily weighted on
operating cash flow and underlying replacement cost profit. Capital and
cost discipline are reflected through two measures – net investment
(organic) and corporate and functional cost management. The delivery of
major projects remains a point of focus. All of these value measures are
key to short-term performance within the group and will have an overall
weight of 70% for the annual bonus 2015.
The committee agreed the performance measures for the 2015 annual
cash bonus as set out opposite.
Targets will be disclosed retrospectively in the 2015 remuneration report to
the extent that they are no longer considered commercially sensitive.
Creating long-term shareholder value
Safety and operational risk 30%
Loss of primary containment 10%
Process safety tier 1 events 10%
Recordable injury frequency 10%
Value 70%
Operating cash flow 20%
Underlying replacement cost
profit 20%
Net investment (organic) 15%
Corporate and functional costs 10%
Major project delivery 5%
Strategic priorities
Quality
portfolio
Distinctive
capabilities
Clear
priorities
2015 annual bonus measures
BP Annual Report and Form 20-F 2014
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