BP 2008 Annual Report Download - page 87

BP Annual Report and Accounts 2008
Directors’ remuneration report
Constitution and operation
Each member of the remuneration committee is subject to annual
re-election as a director of the company. The board considers all
committee members to be independent (see page 70).
They have no personal financial interest, other than as
shareholders, in the committee’s decisions.
The committee met six times in the period under
review. Mr Sutherland, as chairman of the board, attended all
the committee meetings.
The committee is accountable to shareholders through its
annual report on executive directors’ remuneration. It will consider the
outcome of the vote at the AGM on the directors’ remuneration report
and take into account the views of shareholders in its future decisions.
The committee values its dialogue with major shareholders on
remuneration matters.
Advice
Advice is provided to the committee by the company secretary’s office,
which is independent of executive management and reports to the
chairman of the board. Mr Aronson, an independent consultant, is the
committee’s secretary and independent adviser. Advice was also
received from Mr Jackson, the company secretary.
The committee also appoints external advisers to provide
specialist advice and services on particular remuneration matters.
The independence of the advice is subject to annual review.
In 2008, the committee continued to engage Towers Perrin as its
principal external adviser. Towers Perrin also provided limited ad hoc
remuneration and benefits advice to parts of the group, principally
changes in employee share plans and some market information on
pay structures.
Freshfields Bruckhaus Deringer LLP provided legal advice on
specific matters to the committee, as well as providing some legal advice
to the group.
Ernst & Young reviewed the calculations on the financial-based
targets that form the basis of the performance-related pay for executive
directors, that is, the annual bonus and share element awards described
on page 79, to ensure they met an independent, objective standard. They
also provided audit, audit-related and taxation services for the group.
Part 3 Non-executive directors’
remuneration
Policy
Remuneration of the chairman and the non-executive directors continues
to be set by the board. The process by which the board determines that
remuneration was reviewed during the year with the result that:
• The quantum and structure of the chairman’s remuneration would
be reviewed by the remuneration committee. The remuneration
committee would then make a recommendation to the board but
the chairman would not vote on his own remuneration; and
• The quantum and structure of non-executive director remuneration
would be reviewed by the chairman, with support and analysis
provided by the company secretary. The chairman would then make
a recommendation to the board but non-executive directors would
not vote on their own remuneration.
The above changes came into effect for the 2008 review of remuneration.
The other elements of BP’s non-executive director remuneration
policy remain unchanged:
• Within the limits set by the shareholders from time to time,
remuneration should be sufficient to attract, motivate and retain
world-class non-executive talent.
• Remuneration of non-executive directors is set by the board and
should be proportional to their contribution towards the interests of
the company.
• Remuneration practice should be consistent with recognized best-
practice standards for non-executive directors’ remuneration.
• Remuneration should be in the form of cash fees, payable monthly.
• Non-executive directors should not receive share options from the
company.
• Non-executive directors should be encouraged to establish a holding
in BP shares broadly related to one year’s base fee, to be held directly
or indirectly in a manner compatible with their personal investment
activities, and any applicable legal and regulatory requirements.
Fee structure
The table below shows the current fee structure for
non-executive directors:
£ thousand
Fee level
Chairmana 600
Deputy chairmanb 120
Board member 75
Audit committee and SEEAC chairmanship feesc 30
Remuneration committee chairmanship feec 20
Transatlantic attendance allowance 5
Committee membership feed 5
The chairman remains ineligible for committee chairmanship and membership fees or
transatlantic attendance allowance, but has the use of a fully maintained office for company
business, a chauffeured car and security advice.
The role of deputy chairman is combined with that of senior independent director. The deputy
chairman is still eligible for committee chairmanship fees and transatlantic attendance allowance
plus any committee membership fees.
Committee chairmen do not receive an additional membership fee for the committee they chair.
For members of the audit, SEEAC and remuneration committees.
a
b
c
d
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