BP (BP)

Reward Policy

        A key priority for the remuneration committee in 2004 has been its comprehensive and independent review of all elements of remuneration policy for executive directors prior to seeking specific shareholder approval for renewal of the Executive Directors' Incentive Plan, which expires in 2005. This wide-ranging review sought to address the fundamental bases of the remuneration policies and plans for the executive directors. It involved significant academic research as well as seeking the views of plan participants, major shareholders and professional advisers. The committee focused on seeking to ensure that, in determining remuneration policy, there is a clear link between the Company's purpose, the business plans and executive reward.

        As part of its review, the committee developed the following key principles to guide its policy:

—

Policy for the remuneration of executive directors shall be determined and regularly reviewed independently of executive management and will set the tone for the remuneration of other senior executives.



—

The remuneration structure shall support and reflect BP's stated purpose to maximize long-term shareholder value.



—

The remuneration structure shall reflect a just system of rewards for the participants.



—

The overall quantum of all potential remuneration components shall be determined by the exercise of informed judgement of the independent remuneration committee, taking into account the success of BP and the competitive global market.



—

The majority of the remuneration shall be linked to the achievement of demanding performance targets that are independently set and reflect the creation of long-term shareholder value.



—

Assessment of performance shall be quantitative and qualitative and shall include exercise of informed judgement by the remuneration committee within a framework that takes account of sector characteristics and is approved by shareholders.



—

The committee shall be proactive in obtaining an understanding of shareholder preferences.



—

Remuneration policy and practices shall be as transparent as possible both for participants and shareholders.

Reward Policy

        A key priority for the remuneration committee in 2004 has been its comprehensive and independent review of all elements of remuneration policy for executive directors prior to seeking specific shareholder approval for renewal of the Executive Directors' Incentive Plan, which expires in 2005. This wide-ranging review sought to address the fundamental bases of the remuneration policies and plans for the executive directors. It involved significant academic research as well as seeking the views of plan participants, major shareholders and professional advisers. The committee focused on seeking to ensure that, in determining remuneration policy, there is a clear link between the Company's purpose, the business plans and executive reward.

        As part of its review, the committee developed the following key principles to guide its policy:

—

Policy for the remuneration of executive directors shall be determined and regularly reviewed independently of executive management and will set the tone for the remuneration of other senior executives.



—

The remuneration structure shall support and reflect BP's stated purpose to maximize long-term shareholder value.



—

The remuneration structure shall reflect a just system of rewards for the participants.



—

The overall quantum of all potential remuneration components shall be determined by the exercise of informed judgement of the independent remuneration committee, taking into account the success of BP and the competitive global market.



—

The majority of the remuneration shall be linked to the achievement of demanding performance targets that are independently set and reflect the creation of long-term shareholder value.



—

Assessment of performance shall be quantitative and qualitative and shall include exercise of informed judgement by the remuneration committee within a framework that takes account of sector characteristics and is approved by shareholders.



—

The committee shall be proactive in obtaining an understanding of shareholder preferences.



—

Remuneration policy and practices shall be as transparent as possible both for participants and shareholders.