BP 2008 Annual Report Download - page 86

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BP Annual Report and Accounts 2008
Directors’ remuneration report
Service contracts
Director
Contract Salary as at
date 31 Dec 2008
Dr A B Hayward 29 Jan 2003 £1,045,000
I C Conn 22 Jul 2004 £690,000
Dr B E Grote 7 Aug 2000 $1,380,000
A G Inglis 1 Feb 2007 £690,000
Service contracts have a notice period of one year and may be
terminated by the company at any time with immediate effect on
payment in lieu of notice equivalent to one year’s salary or the amount of
salary that would have been paid if the contract had been terminated on
the expiry of the remainder of the notice period. The service contracts
are expressed to expire at a normal retirement age of 60 (subject to
age discrimination).
Dr Grote’s contract is with BP Exploration (Alaska) Inc. He is
seconded to BP p.l.c. under a secondment agreement of 7 August 2000,
which expires on 31 March 2010. The secondment can be terminated by
one month’s notice by either party and terminates automatically on the
termination of Dr Grote’s service contract.
There are no other provisions for compensation payable on early
termination of the above contracts. In the event of the early termination
of any of the contracts by the company, other than for cause (or under
a specific termination payment provision), the relevant director’s then-
current salary and benefits would be taken into account in calculating
any liability of the company.
Since January 2003, new service contracts include a provision to
allow for severance payments to be phased, when appropriate. The
committee will also consider mitigation to reduce compensation to a
departing director, when appropriate to do so.
Director leaving the board in 2008
Dr Allen left the company at the end of March 2008. He was entitled to
one year’s salary (£510,000) as compensation in accordance with his
contractual entitlement, as well as a pro rata bonus for 2008 and
continued full participation in the 2006-08 and 2007-09 share elements,
according to the normal rules of the plan.
Executive directors – external appointments
The board encourages executive directors to broaden their knowledge
and experience by taking up appointments outside the company. Each
executive director is permitted to accept one non-executive appointment,
from which they may retain any fee. External appointments are subject
to agreement by the chairman and reported to the board. Any external
appointment must not conflict with a director’s duties and commitments
to BP.
During the year, the fees received by executive directors for external
appointments were as follows:
Executive director
Additional postion
Appointee held at appointee Total
company company fees
Dr A B Hayward Tata Steel Senior £83,000
Independent
Director
I C Conn Rolls-Royce Senior £65,000
Independent
Director
Dr B E Grote Unilever Audit committee Unilever PLC
member £33,500
Unilever NV
Z48,625
A G Inglis BAE Chair of £86,754
Systems Corporate
Responsibility
Committee
Remuneration committee
All the members of the committee are independent non-executive
directors. Throughout the year, Dr Julius (chairman), Mr Davis, Sir Tom
McKillop and Sir Ian Prosser were members. The group chief executive
was consulted on matters relating to the other executive directors who
report to him and on matters relating to the performance of the
company; neither he nor the chairman were present when matters
affecting their own remuneration were discussed.
Ta s k s
The remuneration committee’s tasks are:
• To determine, on behalf of the board, the terms of engagement and
remuneration of the group chief executive and the executive directors
and to report on these to the shareholders.
• To determine, on behalf of the board, matters of policy over which the
company has authority regarding the establishment or operation of
the company’s pension scheme of which the executive directors are
members.
• To nominate, on behalf of the board, any trustees (or directors of
corporate trustees) of the scheme.
• To review the policies being applied by the group chief executive in
remunerating senior executives other than executive directors to
ensure alignment and proportionality.
• To recommend to the board the quantum and structure of
remuneration for the chairman.
Directors remuneration report
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