2011 Annual Report PDF - Tullow Oil plc

Directors’ remuneration report continued
Summary of Executive Director remuneration policy and structure
Component Objective(s) Details
Salary
Pension &
Benefits
Annual Bonus
Deferred Bonus
PSP
Share ownership
guidelines
Support recruitment
and retention
Provide competitive benefit
and pension provision
Reinforce the delivery
of key short-term
operational objectives
Ensure the release of
significant bonuses is
spread over multiple years
Reinforce the delivery
of absolute and relative
returns to shareholders
Provide alignment with
shareholders
Provide alignment with
shareholders
Adjustments are effective 1 January
Targeted around the median of the relevant market
Executive Directors receive a pension benefit of 25% of salary
Other benefits include health and medical insurance
Opportunity of up to 200% of salary for Executive Directors
Payout is based on the Remuneration Committee’s assessment of
performance using a balanced scorecard comprising Relative TSR,
Health & Safety, Operational & Financial and Project Milestones
Any bonus earned in excess of 75% of salary is paid in shares
and deferred for three years
Annual awards of conditional shares, fixed by number of shares
for the 2011, 2012 and 2013 cycles
Shares vest on Tullow’s three-year TSR outperformance of oil and gas
sector peers (70% of award) and FTSE 100 companies (30% of award)
Full vesting requires Tullow to outperform the benchmark by 20% p.a.
Vesting is also dependent on the Remuneration Committee’s
assessment of underlying performance
Executive Directors are required to retain at least 50% of the post-tax
shares that vest under the PSP and Deferred Bonus until they have
built up a shareholding worth at least 400% of base salary
Proportion of Executive Director pay package value
delivered through each pay component (%)
Value of £100 investment
100
400
80
320
60
240
40
160
20
80
0
Stretch Target
performance performance
0
06 07 08 09 10 11
Salary Pension Cash bonus Deferred bonus PSP
Tullow
FTSE100
‘Target’ performance scenario assumes the annual bonus pays out at target,
the PSP vests at 15% of max and share price growth of 10% p.a. over the
vesting period. ‘Stretch’ performance scenario assumes the annual bonus
pays out at max, the PSP vests in full and share price growth of 20% p.a.
over the vesting period.
The chart shows Tullow’s TSR vs the FTSE 100 Index over the five-year period
from 1 January 2007 to 31 December 2011. The order points plotted are the
values at intervening financial year ends. The FTSE 100 has been chosen as
it is the index that the Company has been a member of for the majority of the
five-year period.
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Tullow Oil plc 2011 Annual Report and Accounts