BP 2014 Annual Report Download - page 79

Corporate governance
Executive directors
Total remuneration summary 2014
Salary – reviewed mid-year and increased by an average of 3% for all
directors – this was in line with average employee increases in the UK and
US.
Annual bonus – the key focus for 2014 was delivery of the group’s
10-point plan, strong operating cash flow, safe and reliable operations and
delivery of major projects within the year. Operating cash flow exceeded
planned targets. Overall safety results were satisfactory and consolidated
the improvements made over the last three years. The underlying
operating performance was strong. Overall group score was 1.10 times
target.
Deferred bonus – 2011 deferred bonus was conditional on safety and
environmental sustainability performance over the period 2012 through to
2014. There was strong and consistent delivery against this hurdle and
2011 deferred and matched shares vested in full.
Performance shares – vesting was based one third on relative total
shareholder return (TSR), one third on operating cash flow and one third on
strategic imperatives including safety and operational risk (S&OR), relative
reserves replacement ratio (RRR) and rebuilding trust internally and
externally. TSR performance did not achieve the minimum level necessary
for this part of the award to vest. There was strong operating cash flow.
There was similarly strong performance against the strategic imperatives.
On a preliminary assessment 60.5% of the 2012-2014 award are
expected to vest.
Pension – pension figures reflect the UK requirements to show 20 times
the increase in accrued pension over the year for defined benefit plans, as
well as any cash paid in lieu.
Single figure table of remuneration of executive directors in 2014 (audited)
Remuneration is reported in the currency received by the individual
Bob Dudley
thousand
Dr Brian Gilvary
thousand
Iain Conn
thousand
Annual remuneration 2014 2014 2013 2014 2013 2014 2013
Salary $1,827 $1,776 £721 £700 £786 £763
Annual cash bonusa $1,005 $2,344 £396 £924 £1,252 £961
Benefits $114 $90 £51 £45 £55 £59
Total $2,946 $4,210 £1,168 £1,669 £2,093 £1,783
Vested equity
Deferred bonus and matchb $3,401 $0 £0 £0 £1,698 £242
Performance shares $6,391c$5,963d £1,904c£505 £2,014c £1,688d
Total $9,792 $5,963 £1,904 £505 £3,712 £1,930
Total remuneration $12,738 $10,173 £3,072 £2,174 £5,805 £3,713
Pension
Pension value increasee $2,596 $4,447 £21 £44 £18 £46
Cash in lieu of future accrual N/A N/A £252 £245 £275 £267
Total including pension $15,334 $14,620 £3,345 £2,463 £6,098 £4,026
a
This reflects the amount of bonus paid in cash with the deferred portion as set out in the conditional equity table below. In the case of Iain Conn, there was no deferral of bonus and all bonus was paid
in cash.
b
Value of vested deferred bonus and matching shares. The amounts reported for 2014 relate to the 2011 annual bonus deferred over three years, which vested on 11 February 2015 at the market price of
$40.35 and £4.46 and include re-invested dividends on shares vested. The amounts reported for 2013 relate to the 2010 annual bonus.
c Represents the assumed vesting of shares in 2015 following the end of the relevant performance period, based on a preliminary assessment of performance achieved under the rules of the plan and
includes re-invested dividends on shares vested. In accordance with UK regulations, the vesting price of the assumed vesting is the average market price for the fourth quarter of 2014 which was £4.27
for ordinary shares and $40.74 for ADSs. The final vesting will be confirmed by the committee in second quarter 2015 and provided in the 2015 Directors’ remuneration report.
d
In accordance with UK regulations, in the 2013 single figure table, the performance outcome value was based on an estimated vesting at an assumed share price of £4.69 for ordinary shares and
$45.52 for ADSs. In May 2014, after the external data became available, the committee reviewed the relative reserves replacement ratio position and assessed that the group was first place relative to
the other oil majors. This resulted in an adjustment to the final vesting from 39.5% to 45.5%. On 15 May 2014, 115,766 ADSs for Bob Dudley and 331,330 shares for Iain Conn vested at prices of
$50.90 and £5.03 respectively. The vesting of the final notional dividends prior to the vesting date took place on 24 June 2014 when Bob Dudley received 1,331 ADSs and Iain Conn received 4,122
shares at prices of $52.84 and £5.24 respectively. The 2013 values for the total vesting have increased by $1,440,954 for Bob Dudley and £356,604 for Iain Conn.
e
Represents the annual increase net of inflation in accrued pension multiplied by 20 as prescribed by UK regulations.
Conditional equity – to vest in future years, subject to performance
Bob Dudley Dr Brian Gilvary Iain Conn
Deferred bonus in respect of bonus year 2014 2013 2014 2013 2014 2013
Total deferred bonus Value (thousand) $2,010 $1,172 £793 £462 –£481
Total deferred converted to shares Shares 294,108 149,628 176,576 96,653 –100,563
Total matched shares Shares 294,108 149,628 176,576 96,653 –100,563
Vesting date Feb 2018 Feb 2017 Feb 2018 Feb 2017 –Feb 2017
Release dateaFeb 2021 Feb 2020 Feb 2021 Feb 2020 –Feb 2018
Performance share element 2014-2016 2013-2015 2014-2016 2013-2015 2014-2016 2013-2015
Potential maximum shares 1,304,922 1,384,026 605,544 637,413 220,043b463,126b
Vesting date Feb 2017 Feb 2016 Feb 2017 Feb 2016 Feb 2017 Feb 2016
Release date Feb 2020 Feb 2019 Feb 2020 Feb 2019 Feb 2018 Feb 2017
a Deferred shares are released at vesting with the exception of matched shares which normally have a further three-year retention period.
b Potential maximum of performance shares element has been pro-rated to reflect actual service during the performance period.
BP Annual Report and Form 20-F 2014 75