BP : Full governance report 2021

Corporate governance

Corporate governance
Introduction from the chair	82
Board of directors	84
Leadership team	88
Board activities and governance framework	90
How the board has engaged with shareholders,
the workforce and other stakeholders	93
Decision making by the board	97
Learning, development and induction	100
Board evaluation	102
People and governance committee	104
Audit committee	107
Safety and sustainability committee	114
Directors' remuneration report	116
Remuneration committee	116
Directors' statements	142

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Introduction from the chair

2021 was a year of further change - the re-invention of bp, helping to ensure that we have the right skills and capabilities in support of the energy transition, while delivering on our investor proposition and increasing distributions

to shareholders.

Helge Lund

Chair

Dear fellow shareholders,

It has now been two years since bp set out its new purpose, ambition and aims - shortly followed by a new strategy and financial and sustainability frames. Within just a few weeks of bp launching its new direction, the world was struck by a global pandemic. As we said in last year's annual report, it was a period

in which the board felt especially keenly its responsibilities for overseeing the delivery of the new strategy and for monitoring the performance of the new organization.

Turning to 2021, this was a year of further change - the reinvention of bp, helping to ensure that we have the right skills and capabilities in support of the energy transition, while delivering on our investor proposition and increasing distributions to shareholders. At the beginning of the year, we put in place a new governance framework underpinning the board's role and its responsibilities to its shareholders. Founded upon four pillars - Strategy, People, Performance, and Governance - this new framework

has stood up well against the challenges of the pandemic and a rapidly evolving and increasingly complex external environment.

Commissioning an independent effectiveness review of the board in 2021 provided an objective view of the performance of the board operating against that framework. It proposed some areas for focus as we seek to continue modernizing our approach. Details are set out on page 104.

In February 2022, bp's governance was tested once again, this time by Russia's attack on Ukraine. Within days of military action, the board had met, undertaken a thorough process of review, and after careful consideration announced bp's decision to exit from its shareholding of Rosneft in Russia. bp's governance framework provided the clarity and flexibility we needed

to act decisively and promptly, having satisfied ourselves that to do so was in the long-term interests of the company's shareholders.

Extensive engagement

One of the privileges of serving on bp's board is being able to meet such a variety of people, with different roles, backgrounds and experiences, and in so many places around the world - inside and outside bp.

Our formal engagement programme allowed the board to meet people based in the tropical rainforests of West Papua, the Abu Dhabi desert, our US retail stations, a refinery in Spain, and our Indian offices - to highlight just a fraction. These were mostly digital meetings, but the gradual lifting of lockdown restrictions opened opportunities to visit bp's new EV charging infrastructure on London's Park Lane, colleagues in front-line roles during a visit to Aberdeen, and representatives from the local community surrounding our proposed low carbon hydrogen projects on Teesside in England.

Our investors are also a vital part of bp's community. We have spent a great deal of time with them, seeking their views on matters ranging from our climate strategy to board governance, diversity and to remuneration. Discussion with our investors ultimately helped to inform the adjustments we announced to some of our net zero aims on 8 February 2022, and our decision to offer shareholders a vote on bp Net zero ambition report. We are hugely grateful for these important engagement opportunities.

Diversity, equity and inclusion

One of the most striking conversations we had in 2021 was with a range of UK and US colleagues representing ethnic minority groups. Hearing people, some of whom had worked with bp for more than 20 years, reflect on changing attitudes over that period was enlightening, but also encouraging. It was clear that there is still work to do in improving diversity and promoting inclusion across bp.

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Corporate governance

The need to improve diversity is why in 2021 the board introduced a diversity policy of its own. I believe board diversity matters; it sets the tone for the rest of the organization and allows us

to draw upon a variety of experiences and perspectives.

I am pleased that bp's board already meets the FTSE Women Leaders Review targets of 40% for representation of women and a female appointed to the position of senior independent director. We have also met the Parker Review's target for black and minority ethnic directors. But I believe bp should consider all dimensions of diversity. Our new diversity policy sets a standard from which we will build. It will see the board encouraging an inclusive environment and overseeing a diverse succession pipeline

- among other important commitments.

In addition, bp has expanded its gender ambition to cover all levels of the business and the board will oversee bp's progress.

The board has also increased its focus on the talent management and development of all bp's people.

Evolution of board

During 2021, we said goodbye to two longstanding board members who served bp and its shareholders with distinction. Professor Dame Ann Dowling and Brendan Nelson stood down after nine and 11 dedicated years' service, respectively. We are grateful to Brendan for continuing beyond the nine-year tenure to properly hand over his role as chair of the audit committee to Tushar Morzaria.

We were pleased to welcome Karen Richardson and Johannes Teyssen to the board. Karen has brought exceptional knowledge of technology, start-ups and cybersecurity, and a digital mindset honed during a career in Silicon Valley. Johannes's long experience leading one of Europe's largest energy companies means

he brings deep and valued knowledge of our sector and its continuing transformation.

Closing thanks

Many people contributed to bp's success in 2021

• our suppliers, our strategic partners, and, of course, our customers. It would be impossible to thank everyone, but I do want to mention three groups.

First, I am deeply grateful to bp's investors, especially those of you who in 2021 shared your views on bp's direction, whether through voting, in writing, or in conversation with the board. We look forward to repaying the faith you have placed in this company. Second, my fellow directors. They have made a strong contribution to bp through a challenging period. Third, Bernard and his leadership team, for all they have achieved so far, and for how they have achieved it - with characteristic determination. But perhaps the greatest thanks should go to bp's people. I could not hope for a better team to entrust the challenge of reimagining energy for people and our planet. Thank you for all you do for bp.

Helge Lund

Chair

18 March 2022

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Board of directors

As at 18 March 2022

Committee membership key

Chair

1. Audit committee

1. Safety and sustainability committee R Remuneration committee
   P People and governance committee

Board gender diversity

1.

2.

	1. Male	6
	2. Female	4

Non executive directors' tenure

1.

2.

	1. 1-3 years	5
	2. 4-6 years	3

Board nationality

		1.
		2.
3.
	1. UK	2
	2. US	4
	3. Non UK/US	4

 P

Helge Lund

Chair

Appointed

Board: 26 July 2018; Chair: 1 January 2019

Nationality

Norwegian

Outside interests

Chair of Novo Nordisk AS; Operating advisor to Clayton Dubilier & Rice; Member of the Board of Trustees of the International Crisis Group; Member of the European Round Table for Industry; Mentor at Chair Mentors International

Career summary

Helge Lund was appointed chair of the bp board on

1 January 2019. He served as chief executive of BG Group from 2015 to 2016, when it merged with Shell. He joined BG Group from Equinor (formerly Statoil) where he served as its president and chief executive officer for 10 years from 2004. Prior to Equinor, Helge was president and chief executive officer of the industrial conglomerate Aker Kvaerner, and has also held executive positions in the Norwegian industrial holding company, Aker RGI, and the former Norwegian power and industry company, Hafslund Nycomed. He worked as a consultant with McKinsey & Company and served as a political advisor for the parliamentary group of the Conservative party in Norway. Prior to joining bp, he was a non-executive director of the oil service group Schlumberger from 2016 to 2018, and Nokia from 2011 to 2014. He served as a member of the United Nations Secretary-General's Advisory Group on Sustainable Energy from 2011 to 2014.

Skills and experience

Helge's distinguished career as a leader in the energy industry and his open-minded and forward-looking approach is vital as he leads the board in its oversight of the delivery of bp's new strategy. He has deep industry knowledge and global business experience - not only in the oil and gas industry but also in pharmaceuticals, healthcare and construction. His innovative leadership of the board drives cohesion and a strong environment for constructive challenge and oversight as bp works to transform into an integrated energy company.

 P

Bernard Looney

Chief executive officer

Appointed

5 February 2020

Nationality

Irish

Outside interests

Fellow of the Royal Academy of Engineering; Fellow of the Energy Institute; Mentor for the FTSE 100 Cross-Company Mentoring Executive Programme

Career summary

Bernard Looney was appointed chief executive officer in February 2020. He previously ran bp's Upstream business from April 2016 and has been a member of the company's executive management team since November 2010. As chief executive, Upstream, Bernard was responsible for bp's oil and gas exploration, development and production activities worldwide.

In this role, Bernard oversaw improvements in both process and personal safety performances, and production grew by 20%. He led access into new countries, high-graded the portfolio and created innovative new business models. In earlier Upstream executive roles, he was responsible for all bp-operated oil and gas production worldwide and for all bp's drilling and major project activity. Bernard joined bp in 1991 as a drilling engineer and worked in operational roles in the North Sea, Vietnam and the Gulf of Mexico.

Skills and experience

Bernard has spent his career at bp and has demonstrated dynamic leadership and vision while progressing through various roles. During his 10 years as a leader of Upstream, Bernard saw the segment through one of the most difficult periods in bp's history, helping transform the organization into a safer, stronger and more resilient business. He has been instrumental in a number of workforce-based initiatives to promote a diverse and inclusive environment. Bernard set out bp's new strategy in 2020 and is guiding the company through its transformation from international oil company to integrated energy company.

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Corporate governance

 P

Murray Auchincloss

Chief financial officer

Appointed

1 July 2020

Nationality

Canadian

Outside interests

Board member of Aker BP ASA; Member of The 100 Group Main Committee

Career summary

Murray Auchincloss qualified as a chartered financial analyst in the US, leading on to a wide range of tax and financial roles, first for Amoco and then for bp after the two organizations merged in 1998. Murray has worked in both the US and UK, in a range of roles including chief financial officer, Upstream, and chief financial officer, North Sea. He held responsibility for the company's North American Gas business and, as head of the chief executive's office for three years, managed all aspects of that office and the executive process.

As chief financial officer, Murray heads up finance, tax, treasury, planning and performance management, mergers and acquisitions, investor relations, audit, global business services and procurement. Murray is currently a member of the board of directors for Aker BP ASA, Norway, and a member of The 100 Group Main Committee.

Skills and experience

Murray's financial expertise, experience and knowledge make him a trusted advisor and Group leader. His broad experience of working across the group has provided him with deep insight into bp's assets and businesses. Murray has a degree in commerce from the University of Calgary, Canada, and qualified as a chartered financial analyst at the University of West Virginia, US. His drive to modernize is improving bp's financial teams, controlling costs and continuing to deliver transparent financial disclosures to investors and markets.

R A  P

Paula Rosput Reynolds

Senior independent director

Appointed

Board: 14 May 2015; senior independent director: 27 May 2020

Nationality

American

Outside interests

Director and chair of National Grid plc; Non-executive director of General Electric Company; Chair of the Seattle Cancer Care Alliance

Career summary

Paula Rosput Reynolds started her energy career at Pacific Gas & Electric Corp in 1979 and spent over 25 years in the energy industry. She has held a number of executive positions during her career, including CEO of Duke Energy Power Services; chair, president and CEO of AGL Resources; chair and CEO of Safeco Corporation; and vice chair and chief restructuring officer of AIG. Paula was previously a non-executive director of TransCanada Corporation, CBRE Group, Inc, BAE Systems PLC, Anadarko Petroleum, Delta Air Lines and Coca Cola Enterprises. Paula was awarded the National Association of Corporate Directors (US) Lifetime Achievement Award in 2014. She was appointed chair of National Grid plc in 2021.

Skills and experience

Paula has had a long career leading global companies in the energy and financial sectors. Her experience with international and US companies, including several restructuring processes and mergers, gives her insight into strategic and regulatory issues, which is an asset to the board. Her wider business experience and understanding of the views of investors make her well-suited to her roles as chair of bp's remuneration committee and senior independent director.

 A  R

Pamela Daley

Independent non-executive director

Appointed

26 July 2018

Nationality

American

Outside interests

Director of BlackRock, Inc.; Director of SecureWorks, Inc.

Career summary

Pamela Daley joined General Electric Company (GE) in 1989 as tax counsel and held a number of senior executive roles in the company, including senior vice president of business development from 2004 to 2013 overseeing a wide range of corporate transactions, and serving as senior vice president and senior advisor to the chair in 2013, before retiring from GE at the end of 2013. Pamela has served as a director of BlackRock since 2014 and of SecureWorks since 2016. She was a director of BG Group plc from 2014 to 2016 until its acquisition by Shell. She was a director of Patheon N.V. from 2016 to 2017 until its acquisition by Thermo Fisher. Prior to joining GE, she was a partner at Morgan, Lewis

• Bockius, a major US law firm, where she specialized in domestic and cross-bordertax-oriented financings and commercial transactions.

Skills and experience

Pamela is a qualified lawyer with significant management insight obtained from previous senior positions held at companies that operate in highly regulated industries. Pamela has a wealth of experience in global business and strategy gained from over

20 years in an executive role at GE. She also has experience in the UK oil and gas industry from her time served on the BG Group plc board. Pamela contributes important insight to the audit committee from her previous executive experience. In 2019, she joined the remuneration committee, where her understanding of employee and investor perspectives brings value.

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