BP 2013 Annual Report Download - page 94

BP Annual Report and Form 20-F 201390
Remuneration committee
The committee was made up of the following independent non-executive
directors:
Members
Antony Burgmans (chairman)
George David
Ian Davis
Professor Dame Ann Dowling
Carl-Henric Svanberg normally attends the meetings
Committee role
The committee’s tasks are formally set out in the board governance
principles as follows:
• 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 shareholders.
• 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.
• To nominate, on behalf of the board, any trustees (or directors of
corporate trustees) of such schemes.
• 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.
• 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 six times. Key discussions and
decision items are shown in the table below.
Remuneration committee 2013 meetings
Jan Mar May Jul Sept Dec
Strategy and policy
Review and approve DRR for 2013 AGM
Consider DRR vote from 2013 AGM
Review impact of new UK regulations
Review policy
Review committee operation
Salary review
Executive directors
Executive team and group leaders
Annual bonus
Assess performance
Determine bonus for 2012
Review measures for 2014
Agree measures and targets for 2014
Long-term equity plans
Assess performance
Determine vesting of 2010-2012 plans
Agree awards for 2013-2015 plans
Review measures for 2014-2016 plans
Agree measures and targets for
2014-2016 plans
Other items
Review chairman's fees
Review major pension programmes
Other issues as required
The board’s overall evaluation process included a separate questionnaire
on the work of the remuneration committee. The results were analyzed by
an external consultant and discussed at the committee’s meeting in
January 2014. Processes continued to be rated as good to excellent and a
number of topics for more in-depth discussion were identified.
Independence and advice
Independence
The committee operates with a high level of independence. The board
considers all committee members to be independent with no personal
financial interest, other than as shareholders, in the committee’s decisions.
Consultation
The group chief executive is consulted on the remuneration of the other
executive directors and senior executives 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 group human
resources director and head of group reward may attend relevant sections
of meetings to ensure appropriate input on matters related to executives
below board level.
The committee consults other relevant committees of the board, for
example the SEEAC, on issues relating to the exercise of its judgement or
discretion.
Advice
Gerrit Aronson, an independent consultant, is the committee’s
independent adviser. He is engaged directly by the committee. Mr
Aronson acts as the secretary to the remuneration committee and advises
the chairman, the board and the nomination committee on a variety of
governance issues.
During 2013, advice to the committee was received from David Jackson,
the company secretary, who is employed by the company and who reports
to the chairman of the board. The company secretary periodically reviews
the independence of the advisers. Advice and services on particular
remuneration matters was received from other external advisers appointed
by the committee.
Towers Watson provided information on the global remuneration
market, principally for benchmarking purposes. Freshfields Bruckhaus
Deringer LLP provided legal advice on specific compliance matters to the
committee. Both firms provide other advice in their respective areas to the
group.
Total fees or other charges (based on an hourly rate) paid in 2013 to the
above advisers for the provision of remuneration advice to the committee
as set out above (save in respect of legal advice) is as follows:
Gerrit Aronson £150,000
Towers Watson £85,000
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 held individual meetings with
shareholders holding in aggregate more than 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. These meetings supplemented a
group meeting of shareholders with all committee chairs and the chairman,
as well as an investor relations programme including a regular ongoing
dialogue between the chairman and shareholders. This engagement
provides the committee with an important and direct perspective of
shareholder interests and, together with the voting results on the Directors’
remuneration report at the AGM, is considered when making decisions.
The committee reviewed remuneration policy during 2013 and, following
dialogue with shareholders, made three adjustments to further reinforce
our bias towards the long term and sustained performance.
First, a three-year retention period has been introduced to the matched
shares that vest in the deferred bonus element.