BP 2012 Annual Report Download - page 131

Corporate governance
Corporate governance
BP Annual Report and Form 20-F 2012
129
Linked to strategy A substantial portion of executive remuneration should be linked to success in implementing the company’s
business strategy.
Performance related The major part of total remuneration should vary with performance, with the largest elements share based,
further aligning interests with shareholders.
Long-term based The structure of pay should reflect the long-term nature of BP’s business and the significance of safety and
environmental risks.
Informed judgement There should be both quantitative and qualitative assessments of performance with the committee making an
informed judgement within a framework approved by shareholders.
Shareholder engagement The remuneration committee will actively seek to understand shareholder preferences and be transparent in
explaining its remuneration policy and practices.
Fair treatment The total quantum of pay should take account of both external market and company conditions to achieve a
balanced ‘fair’ outcome.
Remuneration – the big picture
The remuneration policy for executive directors and the decisions of the remuneration committee have, for many years, been guided by key principles:
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Strategy
10-point plan
- Annual plan developed
from strategy and
10-point plan
2012 bonus outcomes
see page 132
2012 salary
outcomes
see page 131
2012 deferred
bonus outcomes
see page 133
2013 policy
see page 138
- Overall bonus result 97%
of target for group results
- Unchanged from 2012
- 30% based on safety
and operational risk
- 70% based on value
2013 policy
see pages 137 and 141
2013 policy
see page 139
- Unchanged from 2012
2013-2015 plan policy
see page 140
- Unchanged from 2012
- No shares
vested in 2010-2012
plan
- Unchanged from
2012
- No vesting as first plan
matures in 2014
- Salaries increased
by up to 3% in 2012
2012 pension
outcomes
see page 133
- Pension increases in
line with plan rules
and mainly due to promotions
- All deferred and
matched shares are
subject to safety and
environmental sustainability
performance over the
three-year deferral
period
- Performance
measures reflect
strategy and KPIs
- Three-year performance
period followed by
three-year retention
period
- Bonus metrics reflect key
aspects of annual plan
- Meeting plan results
in on-target bonus
- Salaries reviewed
annually taking
account of both
internal and external
comparators
- Pensions follow country
norms and executive
directors participate in
regular home-country
plans
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2010-2012 plan
outcomes
see page 133
As reflected in the diagram below, the company’s strategy forms the core from which key performance indicators are established. The total
remuneration for executive directors is then tied to this via the four elements of total remuneration identified in the diagram below. Three of the four
vary with performance and the majority of their remuneration is long term. For ease of reference page numbers in the report have been identified for
each element where further detail can be found.