BP 2013 Annual Report Download - page 25

Strategic report
BP Annual Report and Form 20-F 2013 21
6 Fair treatment
3 Long-term based
Total overall pay takes account of both the
external market and company conditions to
achieve a balanced, ‘fair’ outcome.
The committee attempts to balance
sometimes conflicting perspectives to arrive
at total pay results that not only reflect
performance relative to strategy, but also are
deemed fair by external stakeholders and
employees, as well as the executive team.
The structure of pay is designed to reflect the
long-term nature of BP’s business and the
significance of safety and environmental risks.
The largest components of total remuneration
are share based and vest over the longest
period. The deferred bonus plan requires
sustained safety and environmental performance
over three years. The matched shares that vest
under the plan have an additional three-year
retention period, resulting in a six-year time
frame. Similarly, performance shares have a
six-year time frame – a three-year performance
period followed by an additional three-year
retention period for those shares that vest.
94%
of votes cast were in favour of the
2012 Directors’ remuneration
report.
5 Shareholder engagement The remuneration committee actively seeks
to understand shareholder preferences and be
transparent in explaining its policy and practice.
During 2013 the remuneration committee
chairman met personally with shareholders
representing nearly 15% of total outstanding
shares. A number of adjustments to policy
were made in response to the feedback
received (see page 82).
There are no perfect
measures. Conditions
change. Events happen.
Judgement is vital.
Antony Burgmans
4 Informed judgement There are quantitative and qualitative
assessments of performance with the
remuneration committee making informed
judgements within a framework approved by
shareholders.
The committee has a preference for quantifiable
targets that can be factually measured and
objectively assessed according to well
understood principles and definitions. It seeks
the views of other relevant committees when
arriving at conclusions. It is not constrained
when conditions change requiring different
perspectives or when unanticipated events,
both good and bad, occur.
Performance period Retention period
4 – 6 years1 – 3 years
Performance
shares Vested shares releasedShares vest based on performance
Matched shares released
Deferred
bonus Shares vest based on performance
Competitive
externally
Consistent
internally
Aligned with
shareholders
Recognizing
stakeholder
views
Fair
treatment