BP 2014 Annual Report Download - page 78

Remuneration committee report
The committee was made up of the following independent
non-executive directors in 2014.
Members
Antony Burgmans (chairman)
George David
Ian Davis
Professor Dame Ann Dowling
In addition, Carl-Henric Svanberg and Bob Dudley normally attend the
meetings except for matters relating to their own remuneration.
Key responsibilities
The committee’s tasks were reviewed during the year and are as follows:
 Determine the policy for the chairman and the executive directors (the
policy) for inclusion in the remuneration policy for all directors as required
by the regulations.
 Review and determine as appropriate the terms of engagement,
remuneration and termination of employment of the chairman and the
executive directors in accordance with the policy, and be responsible for
compliance with all remuneration issues relating to the chairman and the
executive directors required by the regulations.
 Prepare for the board an annual report to shareholders on the
implementation of the policy, so far as it relates to the chairman and the
executive directors, as required by the regulations.
 Approve the principles of any equity plan for which shareholder approval
is to be sought.
 Approve the terms of the remuneration (including pension and
termination arrangements) of the executive team as proposed by the
group chief executive (GCE).
 Approve changes to the design of remuneration as proposed by the
GCE, for the group leaders of the company.
 Monitor implementation of remuneration for group leaders to ensure
alignment and proportionality.
 Engage such independent consultants or other advisers as the
committee may from time to time deem necessary, at the expense of
the company.
In these tasks regulations shall mean regulations made under the
Companies Act 2006 from time to time in relation to the remuneration of
directors of quoted companies, the UK Corporate Governance Code
adopted by the Financial Reporting Council from time to time and the UK
Listing Authority’s Listing Rules from time to time.
Committee review and composition
The board evaluation process included a separate questionnaire on the work
of the remuneration committee. The results were analysed by an external
consultant and discussed at the committee’s meeting in December 2014.
Processes continued to be rated as good to excellent and a number of
topics for more in-depth discussion were identified. In particular the
committee decided to schedule a longer strategy meeting each year.
George David stands down from the board at the next annual general
meeting and will leave the committee. Alan Boeckmann and Andrew
Shilston will join the committee after that meeting.
Professor Dame Ann Dowling will take the chair of the committee in June
2015. Antony Burgmans will remain a member of the committee.
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 GCE is consulted on the remuneration of the other executive directors
and the executive team and on matters relating to the performance of the
group. Neither he, nor the chairman of the board, participate in decisions
on their own remuneration. The group human resources director normally
attends, and other executives may attend relevant parts of meetings.
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
During 2014 David Jackson, the company secretary, who is employed by
the company and reports to the chairman of the board, acted as secretary
to the remuneration committee. The company secretary periodically
reviews the independence of the committee’s advisers.
Gerrit Aronson, an independent consultant, is the committee’s
independent adviser. He is engaged directly by the committee. He advises
the chairman, the board and the nomination committee on a variety of
governance issues. Advice and services on particular remuneration
matters were also 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 2014 to the
above advisers for the provision of remuneration advice to the committee
as set out above (save in respect of legal advice) are as follows:
Gerrit Aronson £140,000
Towers Watson £23,400
Activities during the year
During the year, the committee met five times. Key discussions and
decision items are shown in the table below.
Remuneration committee 2014 meetings
Jan May Jul Sept Dec
Strategy and policy
Review and approve DRR for 2014 AGM
Review and approve EDIP for 2014 AGM
Consider DRR votes from 2014 AGM
Review committee tasks and operation
Salary review
Executive directors
Executive team and leadership group
Annual bonus
Assess performance
Determine bonus for 2013
Agree measures and targets for 2014
Review measures for 2015
Consider measures and targets for 2015
Long-term equity plan
Assess performance
Determine vesting of 2011-2013 plan
Determine vesting of 2010 deferred bonus
Agree measures, targets and awards
for 2014-2016 plan
Review measures for 2015-2017 plan
Consider measures and targets
for 2015-2017 plan
Other items
Review principles for target setting
and disclosure
Other issues as required
BP Annual Report and Form 20-F 201474