BP Annual Report and Form 20-F 2011 - Company Reporting

Directors’ remuneration reportNon-executive directors’remunerationPolicyThe board sets the level of remuneration for all non-executive directorswithin a limit approved from time to time by shareholders. Key elements ofBP’s policy on non-executive director remuneration include:• Remuneration should be sufficient to attract, motivate and retainworld-class non-executive talent.• Remuneration of non-executive directors is proposed by the chairmanof the board and agreed by the board and should be proportional to theircontribution towards the interests of the company.• Remuneration practice should be consistent with recognized bestpractice standards for non-executive directors’ remuneration.• Remuneration should be in the form of cash fees, payable monthly.• Non-executive directors should not receive share options from thecompany.• Non-executive directors are encouraged to establish a holding in BPshares of the equivalent value of one-year’s base fee.ProcessBP reviews the quantum and structure of chairman of the board andnon-executive remuneration on an annual basis. The chairman’sremuneration is reviewed by the remuneration committee, who makes arecommendation to the board; the chairman does not vote on his ownremuneration. Non-executive director remuneration is reviewed by thechairman, who makes a recommendation to the board; non-executivedirectors do not vote on their own remuneration.Following the 2011 review of non-executive remuneration, it wasconcluded that in light of wider economic circumstances, an increasewould not be appropriate and therefore no adjustment would be made tofee levels. It was agreed that the policy of annual review would continueand that the transatlantic attendance allowance be renamed theintercontinental travel allowance to better reflect when the allowanceis awarded.Fee structureThe table below shows the current fee structure for non-executivedirectors on 1 January 2012:£ thousandFee levelChairman a 750Senior independent director b 120Board member 75Audit, Gulf of Mexico and safety, ethics and environmentassurance committees chairmanship fees c 30Remuneration committee chairmanship fee c 20Committee membership fee d 5Intercontinental travel allowance 5a The chairman remains ineligible for committee chairmanship and membership fees orintercontinental attendance allowance. He has the use of a fully maintained office for companybusiness, a chauffeured car and security advice in London. He receives secretarial support asappropriate to his needs in Sweden.bThe senior independent director is still eligible for committee chairmanship fees andintercontinental attendance allowance plus any committee membership fees.cCommittee chairmen do not receive an additional membership fee for the committee they chair.dFor members of the audit, Gulf of Mexico, SEEAC and remuneration committees.Remuneration of non-executive directors in 2011 (audited)£ thousand2011 2010C-H Svanberg 750 750P M Anderson 128 118F L Bowman 120 17A Burgmans 100 90C B Carroll 85 90Sir William Castell 168 147G David 128 a 135I E L Davis 160 69B R Nelson 103 17F P Nhleko b 113–Directors leaving the board in 2011D J Flint 35 108Dr D S Julius 32 c 100aIn addition, George David received a £28,000 fee for chairing the BP technical advisory council.bAppointed on 1 February 2011.cThis figure excludes a superannuation gratuity of £1,543.While fees were held at 2010 levels, in 2011 actual fees paid tonon‐executive directors were affected by changes in chairmanship andcommittee membership and the number of intercontinental meetings forwhich an attendance allowance was paid.No share or share option awards were made to any non-executivedirector in respect of service on the board during 2011.Non-executive directors have letters of appointment whichrecognize that, subject to the Articles of Association, their service is at thediscretion of shareholders. All directors stand for re-election at each AGM.Superannuation gratuitiesUntil 2002, BP maintained a long-standing practice whereby non-executivedirectors who retired from the board after at least six years’ service wereeligible for consideration for a superannuation gratuity. The board was, andcontinues to be, authorized to make such payments under the company’sArticles of Association and the amount of the payment is determined at theboard’s discretion, taking into consideration the director’s period of serviceand other relevant factors.In 2002, the board revised its policy with respect to superannuationgratuities so that:• Non-executive directors appointed to the board after 1 July 2002 wouldnot be eligible for consideration for such a payment.• While non-executive directors in service at 1 July 2002 would remaineligible for consideration for a payment, service after that date wouldnot be taken into account by the board in considering the amount of anysuch payment.Dr DeAnne Julius who retired on 14 April 2011 was paid a superannuationgratuity of £1,543, in line with the policy arrangements agreed in 2002 andoutlined above. With the retirement of Dr Julius from the board, no othernon-executive directors are eligible for superannuation gratuities.Past directorsSir Ian Prosser (who retired as a non-executive director of BP in April 2010)was appointed as a director and non-executive chairman of BP PensionTrustees Limited on 29 September 2010. During 2011, he received£100,000 for this role.Peter Sutherland (who was chairman of BP until 31 December2009) continued his membership of the BP international advisory boardafter his retirement from the board of BP p.l.c. During 2011, he receivede100,000 for this role.Directors’ remuneration reportThis directors’ remuneration report was approved by the board and signedon its behalf by David J Jackson, Company Secretary on 6 March 2012.BP Annual Report and Form 20-F 2011 151