BP 2013 Annual Report Download - page 100

BP Annual Report and Form 20-F 201396
Directors’ remuneration policy
The following pages set out the remuneration policy
for directors of BP p.l.c., which, if approved by
shareholders at the AGM on 10 April 2014, will take
effect from the date of that meeting.
The policy is divided into separate sections for
executive and non-executive directors. The
remuneration of the executive directors is set by the
remuneration committee (the committee) under
delegated powers from the board. The committee
makes a recommendation to the board for the
remuneration of the chairman. The remuneration of
the non-executive directors is set by the board
based on a recommendation from the chairman, the
group chief executive and the company secretary.
(a) Executive directors
Introduction
The remuneration policy for the executive directors and the decisions of
the remuneration committee have been consistently guided by six key
principles. These principles were introduced more than 10 years ago and
have been described in all remuneration reports to shareholders since
then.
Key principles
The principles represent the overarching approach of the board and the
committee to the remuneration of the executive directors.
Linked to strategy: A substantial proportion of executive director
remuneration is linked to success in implementing the company’s strategy.
Performance related: The major part of total remuneration varies with
performance, with the largest elements being share based, further aligning
with shareholders’ interests.
Long term: The structure of pay is designed to reflect the long-term
nature of BP’s business and the significance of safety and environmental
risks.
Informed judgement: There are quantitative and qualitative assessments
of performance with the remuneration committee making informed
judgement within a framework approved by shareholders.
96 (a) Executive directors
96 Introduction
98 Remuneration policy table
100 Remuneration policy in more depth
100 Salary and benefits
100 Annual bonus
101 Deferred bonus
102 Performance shares
103 Pension
104 Scenario charts
105 Recruitment
105 Service contracts
105 Exit payments
106 External appointments
107 (b) Non-executive directors
Fair treatment: Total overall pay takes account of both the external market
and company conditions to achieve a balanced, ‘fair’ outcome.
Shareholder engagement: The remuneration committee actively seeks
to understand shareholder preferences and be transparent in explaining its
policy and decisions.
The aim of this policy is to ensure that executive directors are remunerated
in a way that reflects the company’s long-term strategy. Consistent with
this, a high proportion of directors’ total potential remuneration has been,
and will be, strongly linked to the company’s long-term performance.