BP 2014 Annual Report Download - page 86

Shareholder engagement
The committee values its dialogue with major shareholders on
remuneration matters. During the year, the committee’s chairman, the
committee’s independent adviser and the company secretary held
individual meetings with shareholders to ascertain their views and discuss
important aspects of the committee’s policy and its implementation. They
also met key proxy advisers. These meetings supplemented a group
meeting of major shareholders with all committee chairs and the chairman
which took place in March 2014, as well as an investor relations
programme including a regular ongoing dialogue between the chairman
and shareholders. Throughout the year this engagement provided the
committee with an important and direct perspective of shareholder views
and, together with the voting results on remuneration matters at the AGM,
was considered when making decisions.
Shareholders who voted against the report or withheld their vote did so for
several reasons. These related principally to insufficient detailed
information to explain vesting outcomes and no firm commitment to
retrospective disclosure of targets currently deemed to be commercially
sensitive. For some, quantum was also an issue.
In his engagement, the chairman of the committee has sought to address
these issues. While the absolute quantum of remuneration is a product of
the implementation of the approved policy and of the performance of the
group, additional disclosure is now part of this report. Specifically, the
committee now discloses targets retrospectively for both annual bonus
and long-term performance shares unless there are specific confidentiality
issues.
The board’s annual report on remuneration was approved by shareholders
at the 2014 AGM. The votes on the report are shown below.
2014 AGM directors’ remuneration report vote results
Year % vote ‘for’ % vote ‘against’ Votes withheld
2014 83.9% 16.1% 2,218,417,773
The committee’s remuneration policy was approved by shareholders at the
2014 AGM. The votes on the policy are shown below.
2014 AGM directors’ remuneration policy vote results
Year % vote ‘for’ % vote ‘against’ Votes withheld
2014 96.4% 3.6% 125,217,443
The shareholder approved policy now governs the remuneration of the
directors for a period of three years expiring in 2017. It is the board’s
intention that the policy be renewed at the AGM in 2017.
See bp.com/remuneration for a copy of the approved policy.
External appointments
The board supports executive directors taking up appointments outside the
company to broaden their knowledge and experience. 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. Details of
appointments during 2014 are shown below.
Director Appointee company
Additional position held at
appointee company Total fees
Bob Dudley RosneftaDirector 0
Iain Conn BT Group plcb
Rolls-Royce plcc
Non-executive
director
Senior independent
director and chairman
of the ethics
committee
£54,000
£29,300
a Bob Dudley holds this appointment as a result of the company’s shareholding in Rosneft.
b Appointed 1 June 2014.
c Resigned 23 May 2014.
Executive director leaving the board
Iain Conn resigned as a director of the company and left BP’s employment
on 31 December 2014. This decision was announced on 24 July 2014, and
he served BP on his existing contractual terms until 31 December 2014
while working five months of the 12 months’ notice period specified in his
service contract. His settlement agreement dated 24 July 2014 is in
accordance with the policy and details are set out in the summary below.
Certain aspects of the arrangements described involved the exercise of
discretion by the committee in his favour. The committee was satisfied
that this was appropriate in view of his long and successful career with BP.
lain Conn was potentially entitled to a termination payment of up to
£453,677, calculated as approximately seven months of his base salary of
£797,000 per annum. This was to be paid in seven monthly instalments
from January 2015, but would cease to be payable in the event that he
commenced another employment prior to 24 July 2015. lain Conn
commenced employment with Centrica plc on 1 January 2015 and,
accordingly, no termination payment was made to him.
lain Conn worked for the full 2014 financial year, and so was eligible for an
annual bonus payment paid in cash. The amount of this bonus is stated on
page 77.
lain Conn is entitled to an early retirement pension from age 55. In respect
of service from 1 December 2006 to his leaving date, he will be subject to
a 3% per annum reduction in his pension from age 55.
The share awards held by Iain Conn under the EDIP have been preserved
in accordance with the good leaver provisions and will vest at the normal
date, to the extent that performance targets are met:
 Performance share awards granted in 2012, 2013 and 2014 (all of which
will be pro-rated to reflect Iain Conn’s period of service within the
performance cycle); and
 Compulsory deferred bonus awards granted in 2012, 2013 and 2014,
voluntary deferred bonus awards granted in 2012 and 2013 and
matching share awards granted in 2012, 2013 and 2014. The vesting of
the matching share awards (but not the compulsory deferred bonus or
the voluntary deferred bonus) will be subject to time pro-rating.
Information on these preserved share awards (including the vesting of
share awards in the period up to 23 February 2015 and details of additional
shares awarded representing re-invested dividends on such vested
awards) is shown (pro-rated as appropriate) on pages 84 and 85.
The information relating to the vesting of share awards will be updated in
the 2015 and 2016 remuneration reports.
To the extent that matching share awards granted in 2014 and any
performance share awards vest, the post-tax number of shares will be
subject to a twelve-month retention period. Vested performance share
awards that are currently within their three-year post-vesting retention
period must be retained until 31 December 2015.
Iain Conn will continue to be covered by the company’s D&O insurance
and his indemnity in respect of third-party liabilities will continue in force
according to its terms. The company made a contribution towards his legal
fees in connection with these arrangements.
Historical data and statistics
Historical TSR performance
2008 2009 2010 2011 2012 2013 2014
BP
FTSE 100
£50
£100
£150
£200
Value of hypothetical £100 holding
This graph shows the growth in value of a hypothetical £100 holding in BP
p.l.c. ordinary shares over six years, relative to a hypothetical £100 holding
in the FTSE 100 Index of which the company is a constituent. The values
of the hypothetical £100 holdings at the end of the six-year period were
£107.45 and £194.77 respectively.
BP Annual Report and Form 20-F 201482