BASE SALARY
To attract and retain talent to help achieve our strategic objectives.
ANNUAL INCENTIVE SCHEME Delivered in the form of cash awards, automatic deferral into DBP share awards and/or voluntary deferral into VBDP share awards. Designed to reward the achievement of the strategic and operational business priorities for the financial year. The DBP and VBDP are designed to provide further alignment with the interests of shareholders.
LONG-TERM INCENTIVE PLAN Awards over BG Group shares Designed to align the interests of Executive Directors with those of shareholders by rewarding the Executive Directors for value growth over the longer term.
BENEFITS
To attract and retain talent to help achieve our strategic objectives.
PENSION
To attract and retain talent to help achieve our strategic objectives.
Paid monthly and, usually, reviewed annually with any increases taking effect from 1 April. The review involves the consideration of market position relative to relevant comparator groups, including our sector peers and non-financial services FTSE 30 constituents, and is also influenced by:
• The Executive Director’s role,
experience and performance; • Business performance, the wider
market and economic conditions; and • The range of salary increases applying
across the Group in similar inflationary environments.
The Committee may review and adjust salaries other than in the course of the annual review, including where
an Executive Director’s role or market positioning changes significantly. Where the change in role is on an interim basis, the Committee may determine that, instead of an increase in salary, a non-pensionable interim allowance is payable, the level of which will be informed by those factors influencing salary reviews.
The AIS is reviewed prior to the start of each financial year to ensure the bonus opportunity, performance measures and weightings are appropriate and continue to support the strategic and operational business priorities for the forthcoming financial year. Stretching financial and non-financial performance measures and targets are set at the start of each financial year.
Actual AIS awards are determined by a two-stage process. Firstly, performance is assessed against the agreed measures and targets. Secondly, the Committee reviews these results in the context of individual performance and the underlying performance of and prospects for the business. If the Committee considers that the stage one outcome does not reflect the performance or prospects of the
Company appropriately, it may adjust the stage one outcome, downwards or upwards, within the overall AIS limits, at its discretion.
AIS awards are subject to automatic and/or voluntary deferral into awards over BG Group shares. For AIS awards in excess of 100% of base salary, the excess is automatically deferred for three years into share awards over BG Group shares under the DBP, which accrue dividend equivalents. Forfeiture and malus provisions apply to the vesting of DBP awards, which may be reduced in circumstances where the Company becomes aware of misconduct or performance issues relevant to the bonus award year, or if the individual ceases to be an Executive Director or employee as a result of misconduct. Forfeiture and malus provisions apply to VBDP awards,
which may be reduced if the individual ceases to be an Executive Director or employee as a result of misconduct. Executive Directors are also able voluntarily to defer a proportion of their AIS award into awards over BG Group shares under the VBDP, which is available to other employees. VBDP awards vest three months after the date of grant. Dividend equivalents accrue on VBDP awards.
The number of shares comprising DBP or VBDP awards is calculated using the average share price over the three or five dealing days preceding the date of grant. The automatic and voluntary deferral arrangements are reviewed periodically and may be altered or removed by the Committee.
Details for the Executive Directors for the period under review are set out in the Annual Remuneration report on page 66.
In accordance with the rules of the LTIP, the Committee may grant PSAs, and/or Market Value Options to Executive Directors. To date, the Committee has granted only PSAs to Executive Directors. The award levels and performance conditions on which vesting will be dependent are reviewed annually to ensure they remain appropriate. A number of factors are considered when determining the level of any award, including the position of the Executive Director’s overall reward package relative to the market, the Executive Director’s performance and experience, the face value and EPV of the proposed award, and plan dilution limits.
EPV is a measure of the economic or fair value of an award. The measure takes account of the performance conditions, the risk that the performance conditions might not be met and the risk that awards may be forfeited. EPV is calculated independently by the Committee’s advisers. The face value of an award is equal to the number of shares, or shares under option, multiplied by the relevant share price at grant. PSAs vest over a period set by the Committee, which will normally be three years from the date of grant. Dividend equivalents accrue on PSAs. For 2013 and later LTIP PSAs, a proportion of the net vested shares on vesting are
subject to a further holding period, during which forfeiture and malus provisions apply. The number of shares that will be released at the end of this holding period may be reduced in circumstances where the Company becomes aware of misstatement of the financial accounts, individual misconduct or performance issues. At grant, the Committee sets the length of the holding period and the proportion of net vested shares subject to the holding period. For the life of this Policy, these will be at least two years and at least 50% respectively (n.b. implemented from
2014 as 100%).
Benefits typically include life assurance, income protection, personal accident insurance, annual leave, financial counselling and medical insurance. Executive Directors may be provided with additional benefits, such as on- site fitness facilities, on the same basis as other employees. Flexible benefit arrangements may be offered, including
a company car or cash in lieu of a company car and, where appropriate to assist with their roles, chauffeur services may also be provided. Executive Directors are also eligible to participate in our all-employee share plans, currently the Share Incentive Plan and the Sharesave Plan, on the same basis as other employees.
Executive Directors are covered under the terms of the Company’s directors’ and officers’ liability insurance.
Executive Directors can choose to participate in the relevant local defined contribution pension arrangement or receive cash in lieu, or a combination thereof.
Employees who joined BG Group in the UK prior to April 2007 may be deferred members of the UK defined benefit pension arrangement which
was closed to future accrual on 31 December 2013.
OPERATION PURPOSE AND LINK TO STRATEGY
FIXED PAY
VARIABLE PAY
OUR REMUNERATION STRUCTURE
DIRECTORS’ REMUNERATION POLICY REPORT The Directors’ Remuneration Policy (the Policy) was approved by shareholders at the AGM in May 2014. No changes to the Policy are proposed and so there will be no vote on the Policy at the 2015 AGM. However, for convenience, we are including the Policy
table on these pages. The full Policy, as approved by shareholders, can be found in last year’s Remuneration report and on the BG Group website at www.bg-group.com/remunerationpolicy
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Base salary increases will be applied in line with the outcome of the review. Maximum salary increases to Executive Directors will be within the range of those awarded to other employees in similar inflationary environments, other than where it is appropriate to recognise performance showing significant progression within the role or a material
change in the responsibilities of the role. The level of base salary paid, and any interim allowance, will vary by role and will be no more than is necessary to attract and retain Executive Directors with the necessary experience and skills.
Details for the Executive Directors for the period under review are set out in the Annual Remuneration report on page 66.
The AIS offers a maximum opportunity of up to 200% of base salary, with target and threshold opportunities of up to 100% and up to 45% of base salary, respectively. Each year, the Committee determines maximum, target and threshold AIS opportunities, which may vary by role, on an individual basis, within those scheme limits. Employees who are not members of the GLT are eligible for an additional 10% award of the amount deferred
under the VBDP that vests, provided their voluntary award is deferred for at least three years. Where employees with these awards subsequently become members of the GLT, it is the Company’s policy to honour the awards in accordance with their terms, which may differ from the terms of awards granted under this Policy.
Individual limits for the Executive Directors receiving an award for the period under review are set out in the Annual Remuneration report on page66.
Awards granted to individuals under the LTIP are subject to the following annual limits:
• An overall EPV limit of 300% of base salary; and
FTSE 30 constituents and the median of awards to the chief executives of the Group’s sector peers.
The maximum opportunity for threshold performance is 25% of the Benefit values vary by role and are
reviewed by reference to market position periodically. The maximum level of benefits will be no more than is necessary to attract and retain Executive Directors with the necessary experience and skills. Executive Directors will be reimbursed for business expenses relating to the performance of their duties, including
travel, accommodation and subsistence. Occasional travel, accommodation and subsistence expenses will be reimbursed and may be grossed up for any tax due where the Company requires Executive Directors’ spouses or partners to travel.
Details for the Executive Directors for the period under review are set out in the Annual Remuneration report on page 66.
Executive Directors can choose a pension contribution or receive cash in lieu, or a combination thereof, up to 30% of base salary. No current Executive Director is a
deferred member of the UK defined benefit pension arrangement.
Details for the Executive Directors for the period under review are set out in the Annual Remuneration report on page 66.
Individual and business performance is considered in reviewing and setting base salary.
The performance measures selected for the year, and their relative weighting, may vary each year depending upon strategic and operational business priorities. The performance of each Executive Director is measured against their individual objectives for the year which, as part of their operational objectives, include challenging budget and stretch targets in key operational areas. Performance measures may be selected from externally reported financial measures, such as EPS and ROACE, other internal financial measures, such as working capital targets, and/or operational measures, such as project performance and HSSE.
The Committee has the flexibility to vary the weightings and to select alternative or additional measures over the life of this Policy to ensure that the AIS is aligned to the strategic and operational priorities of the business for the forthcoming financial year, subject to maintaining a weighting of at least 50% for externally reported financial measures, such as EPS and ROACE.
Details of the performance measures for the period under review are set out in the Annual Remuneration report on page 67.
LTIP awards vest in accordance with the plan rules and vesting is usually subject to the following conditions: • Continued employment; • The individual’s performance not
To ensure that the LTIP rewards value creation over the longer term, the Committee has the flexibility to vary the weighting of the TSR performance measure and to set the weighting of Some benefits, such as life assurance,
are calculated by reference to base salary.
Calculated by reference to base salary.
OPPORTUNITY PERFORMANCE MEASURES
STR A TE G IC R EP O R T C O R P O R A TE GO V ER N A N C E FI N A N C IA L S TA TE M EN TS SH A R EHOL D ER IN FOR M A TION
DETERMINATION OF ACTUAL BONUS 150 121 60 Bonus as % of salary Target Actual Maximum