BP 2012 Annual Report Download - page 136

Corporate governance
BP Annual Report and Form 20-F 2012
134
Remuneration committee
The committee was made up of the following independent
non-executive directors:
Antony Burgmans – chairman
George David
Ian Davis
Professor Dame Anne Dowling (appointed July 2012)
Carl-Henric Svanberg normally attends the meetings.
Tasks
The committee’s tasks are formally set out in the board governance
principles as follows:
t To determine, on behalf of the board, the terms of engagement
and remuneration of the group chief executive and the executive
directors and to report on these to the shareholders.
t To determine, on behalf of the board, matters of policy over which
the company has authority regarding the establishment or operation
of the company’s pension schemes of which the executive directors
are members.
t To nominate, on behalf of the board, any trustees (or directors
of corporate trustees) of such schemes.
t To review and approve the policies and actions being applied by
the group chief executive in remunerating senior executives other
than executive directors to ensure alignment and proportionality.
t To recommend to the board the quantum and structure of remuneration
for the chairman of the board.
Committee activities
During the year, the committee met five times. Key discussions
and decision items are shown in the table below.
The committee again undertook an evaluation of its operations using an
external questionnaire administered by an external consultant. The
committee discussed the findings at its January 2013 meeting. Almost all
processes were rated as good to excellent in the report and in discussion
the committee identified a number of areas for inclusion in 2013 agendas.
Remuneration committee 2012 meetings
Feb May Jul Sep Dec
Strategy and policy
Directors’ remuneration report for 2012 AGM
Directors’ remuneration report vote outcome
Remuneration policy
Committee operation
Salary review
Executive directors
Executive team and leadership group
Annual bonus
Assess performance
Determine bonus for 2011
Review measures for 2013
Agree measures and targets for 2013
Long-term equity plans
Assess performance
Determine vesting of 2009-2011 plans
Agree awards for 2012-2014 plans
Review measures for 2013-2015 plans
Agree measures and targets for 2013-2015 plans
Other items
Review chairman’s fees
Other issues as required
Independence
The committee operates with a high level of independence. The board
considers all committee members to be independent (see page 112)
with no personal financial interest, other than as shareholders, in the
committee’s decisions.
The group chief executive is consulted on matters relating to the other
executive directors and senior executives who report to him and on
matters relating to the performance of the company; neither he nor the
chairman of the board participate in decisions on their own remuneration.
Both the company’s head of human resources and head of group reward
attend relevant sections of meetings to ensure appropriate input on
matters related to executives below board level.
Gerrit Aronson, an independent consultant, is the committee’s
independent adviser as well as secretary. He is engaged directly by the
committee and not by executive management. Advice is also received
from the company secretary, who reports to the chairman of the board;
and from other external advisers appointed by the committee for
specialist advice and services on particular remuneration matters. In
2012 the committee continued to engage Towers Watson as its principal
external adviser, primarily for market information. Freshfields Bruckhaus
Deringer LLP provided legal advice on specific matters to the committee.
Both firms provide other advice in their respective areas to the group. The
independence of the advice is periodically reviewed by David Jackson,
the company secretary to ensure it meets a high standard.
Shareholder engagement
The committee values its dialogue with major shareholders on
remuneration matters. During the year the committee’s chairman and the
committee’s independent adviser personally met with key shareholders
holding around 20% of the company’s shares to ascertain their views and
discuss important aspects of the committee’s policy. They also met key
proxy advisers to similarly engage. This engagement provides the
committee with an important direct perspective of shareholder interests
and, along with the vote at the AGM on the directors’ remuneration
report, is considered when making decisions.