BP 2015 Annual Report Download - page 80

2015 annual report on remuneration
Highlights of the year
Strong safety and operational performance in a difficult
environment
• Responded early and decisively to lower oil price environment.
• Excellent safety standards with continuous improvement over the
past three years, leading to improvements in reliability and operations.
• Strong operating cash flow★ and underlying replacement cost profit
relative to plan.
• Net investment (organic)★ managed aggressively to reflect ‘lower for
longer’ oil price environment.
• Executive directors’ pay outcomes reflect strong operating
performance relative to plan.
• Alignment between executives and shareholders with the majority of
executive director remuneration paid in equity with lengthy retention
requirements.
Remuneration policy
Throughout this report, the word policy refers to the directors’
remuneration policy approved by shareholders at the company’s annual
general meeting on 10 April 2014. As shown below, BP’s strategy is
reflected in the measures adopted by the committee in 2016 for the
executive directors and the metrics and targets are designed to assess
performance against that strategy. Net investment (organic) has been
removed as a measure for 2016. The same measures and targets are used
for the wider management. A summary of the policy is located on pages
88-89 and the full policy is available at bp.com/remuneration and is set out
in the BP Annual Report and Form 20-F 2013. The committee has again
reviewed the terms of the executive directors’ remuneration and confirmed
77 Executive directors
78 Salary and benefits
78 Annual bonus
79 Deferred bonus
80 Performance shares
82 Pension
83 Remuneration committee
84 Shareholder engagement
84 External appointments
84 Historical data and statistics
85 Directors’ shareholdings
88 Remuneration policy table
90 Non-executive directors
that malus and clawback provisions exist in all terms save the cash
element of the annual bonus. It will consider this on the next occasion that
it reviews the remuneration policy. Separate sections of this report contain
information pertaining to executive and non-executive directors. The
remuneration of executive directors is set by the remuneration committee
under delegated powers from the board. The committee makes a
recommendation to the board for the remuneration of the chairman. The
remuneration of non-executive directors is set by the board based on a
recommendation from the chairman, the group chief executive and the
company secretary.
Directors’ remuneration report
2016 bonus and equity plans supporting BP’s strategic priorities
Short term: annual bonus Long term: performance share plan
Safety and operational risk Value Relative total shareholder return
Loss of primary containment Operating cash flow Cumulative operating cash flow
Process safety tier 1 events Underlying replacement cost profit Strategic imperatives:
Relative reserves replacement ratio
Safety and operational risk
Major project delivery
Recordable injury frequency Corporate and functional costs
Major project delivery
Creating long-term shareholder value
Strategic priorities
Source
future
growth
Focus on
high-value
upstream
assets
Quality portfolio
Build high-quality
downstream businesses
Proven
expertise
Strong
relationships
Distinctive capabilities
Advanced
technology
Disciplined
financial
choices
Competitive
project
execution
Clear priorities
Safe, reliable and
compliant operations
Group key
performance
indicator.
The Chairman’s Statement (which forms part of the Directors’ Remuneration Report) is located on pages 22-23. Please refer to this for an overview from
Professor Dame Ann Dowling on the performance and pay outcomes for 2015.
BP Annual Report and Form 20-F 201576