BP 2010 Annual Report Download - page 114

Directors’ remuneration report
P art 1 Summary
Dr DeAnne S Julius
Chairman, Remuneration Committee
2 March 2011
Remuneration decisions for 2010 were dominated by the scale and
impact of the accident in the Gulf of Mexico.
The remuneration committee shared the group chief executive’s
view that no bonuses should be paid on group-level results. Thus
Mr Dudley received no bonus for the year. There is also no vesting of the
2008-2010 share element for any executive director.
Dr Hayward and Mr Inglis, who left BP during the course of the
year, received their contractual entitlements of one year’s salary on
termination, together with other limited entitlements. Outstanding share
element awards were preserved on a pro rata basis, with vesting being
conditional on meeting applicable performance targets. Neither was
awarded any annual bonus for 2010.
While the tragedy of lost lives and environmental damage remains
foremost in everyone’s minds, the committee also wished to fairly
acknowledge the good business results in many parts of BP, delivered in
the most testing of times. Mr Conn and Dr Grote met or exceeded their
specific segment/functional targets for the year and were awarded 30%
of their overall ‘on-target’ bonuses, including the deferred element. This
reflected no payout on the portion related to group results (as with all
executive directors) and was limited to ‘on-target’ for the portion related to
their strong segment/functional results. A third of their bonus is deferred
into shares on a mandatory basis, matched, and will vest in three years
subject to meeting a safety and environmental hurdle during the period.
Both individuals may elect to defer an additional third into shares on the
same basis as the mandatory deferral. Both will receive salary increases
in 2011 as noted in the table opposite.
Full details of executive director remuneration are set out in the
table below.
For 2011 the overall policy for executive directors will remain largely
unchanged, as summarized opposite. However, the committee will take a
more active role in the oversight of pay policy and practice below the board.
Together with the group chief executive, the committee will be reviewing
the overall policy for senior executives to ensure that it promotes long-term
sustainable success for shareholders as well as rewarding appropriately the
many talented people leading the company.
Finally, as I retire after five years as remuneration committee
chairman and 10 years on the board, I would like to thank the shareholders
both for their challenge and their support as the company has navigated
through difficult, as well as successful, times.
Summary of remuneration of executive directors in 2010 (information subject to audit)
Annual remuneration Long-term remuneration (EDIP)
Share element of EDIP
2010 deferred 2008-2010 plan 2010-2012
annual bonus (vested in Feb 2011) plan
Annual cash Non-cash benefits and Potential
Salarya performance bonus other emoluments Total Potential Actual maximum
(thousand) (thousand) (thousand) (thousand) Mandatory voluntary shares Value performance
2009 2010 2009 2010 2009 2010 2009 2010 deferralb deferralc vested (thousand) sharesd
R W Dudleye $750 $1,175 $1,125 0 $304f $564f $2,179 $1,739 0 0 0 0 581,084
I C Conn £690 £690 £1,104 £104 £46 £34 £1,840 £828 £104 £104 0 0 656,813
Dr B E Grotee $1,380 $1,380 $2,070 $207 $8 $10 $3,458 $1,597 $207 $207 0 0 801,894
Directors leaving the
board in 2010
Dr A B Haywardg £1,045 £958 £2,090 0 £23 £95 £3,158 £1,053 0 0 0 0 303,948
A G Inglish £690 £575 £1,311 0 £216
f£168f i £2,217 £743 0 0 0 0 218,938
Amounts shown are in the currency received by executive directors. Annual bonuses are shown in the year they were earned.
a
Figures show the total salary received during the calendar year. The last salary increase was in July 2008 other than on promotion of Mr Dudley to group chief executive.
bT his amount will be converted to deferred shares at the three-day average share price following the full-year results announcement (£4.84, $46.68). Deferred shares will be matched one-for-one and both
deferred and matched shares are subject to a safety and environmental hurdle over the three-year deferral period.
c Ex
ecutive directors have the choice to have this portion either paid in cash or deferred voluntarily into shares on the same basis as the mandatory deferral.
d
Maximum potential shares that could vest at the end of the three-year period depending on performance – reduced pro-rata for Dr Hayward and Mr Inglis to reflect actual service during performance period.
e
Mr Dudley and Dr Grote hold shares in the form of ADSs. The above number reflects calculated equivalent in ordinary shares.
f
This amount includes costs of London accommodation and any tax liability thereon that ceased at the end of 2010 following Mr Dudley’s appointment as group chief executive and Mr Inglis’s retirement
from the board.
g Dr
Hayward left the board on 30 November 2010. In addition to the above he was awarded compensation for loss of office equal to one year’s salary (£1,045,000) and a further £30,000 in respect of UK
statutory compensation rights.
h Mr Inglis left the board on 31 October 2010. In addition to the above he was awarded compensation for loss of office equal to one year’s salary (£690,000) and a further £200,000 to cover various
repatriation and relocation costs in accordance with his international assignment arrangements.
i In
addition to this amount, under a tax equalization arrangement, BP discharged a US tax liability arising from the participation by Mr Inglis in the UK pension scheme amounting to $1,260,000.
112 BP Annual Report and Form 20-F 2010