BP 2012 Annual Report Download - page 139

Corporate governance
Corporate governance
BP Annual Report and Form 20-F 2012
137
Min On target
Iain Conn
Max Min On target
Dr Brian Gilvary
Max
Executive directors paid in UK£ (thousand)
Performance sharesCash bonus Deferred bonus (including match) Salary
2,500
5,000
7,500
10,000
20,000
15,000
10,000
5,000
Executive directors paid in US$ (thousand)
Performance sharesCash bonus Deferred bonus (including match)Salary
Min On target
Bob Dudley
Max Min On target
Dr Byron Grote
Max
2013 remuneration policy in more depth
Total remuneration is made up of the five components summarized in the table opposite. Each of these is explained in more detail in this section of the
report. The total remuneration opportunity for executive directors is strongly performance based and weighted to the long term. As shown below over
90% of the group chief executive’s total direct remuneration opportunity (that is at maximum) requires the achievement of demanding performance
requirements, and over 80% is long term – three years in the case of deferred bonus and six years for the performance shares.
The two charts above provide scenarios for what executive directors may
get paid for different levels of performance, consistent with the draft UK
regulations on remuneration reporting. Dr Byron Grote’s chart shows
full-year values for illustration and does not reflect the impact of his
announced retirement from the board.
The minimum amount reflects current base salary which is the only part
of total direct remuneration that is not performance related.
On-target amounts are based on the following assumptions:
t Current salary.
t Cash bonus reflecting ‘on-target’ level of 150% of salary of which
two-thirds is paid in cash.
t Deferred bonus reflecting one-third of ‘on-target’ bonus of 150% which
is deferred on a mandatory basis and matched on a one-for-one basis.
t Performance shares that vest to a value of one half of the maximum.
t Share prices are assumed to remain constant for calculation purposes.
Maximum amounts are based on the following assumptions:
t Current salary.
t Cash bonus reflecting maximum level of 225% of salary of which
one-third is paid in cash.
t Deferred bonus reflecting two-thirds of maximum bonus of 225%
which is deferred on a mandatory and voluntary basis, and matched
one-for-one.
t Performance shares that fully vest amounting to 5.5 times salary for the
group chief executive and 4 times salary for other executive directors.
t Share prices are assumed to remain constant for calculation purposes.
Salary – 2013 policy
As most components of total remuneration are determined as multiples of
salary, the remuneration committee makes careful reviews of salaries,
normally annually. These reviews include thorough consideration of other
large UK and Europe-based global companies, other oil majors, and
relevant US companies. They also include similar consideration of the
salary treatment throughout the company, as well as company
performance and investor perspectives. It is expected that salaries for
executive directors will be reviewed mid-year in this context.