Remuneration

Role of the committee

The role of the committee is to:

  • Determine and agree with the Board the broad policy and framework for the remuneration of Executive Directors, the Chairman and certain senior managers
  • Review the continued appropriateness and relevance of the Remuneration Policy
  • Ensure that incentives are appropriate to encourage superior performance and provide alignment with long-term shareholder value. Approve the design of, and determine the targets for, performance related pay schemes
  • Review the design of all share incentive plans before approval by the Board and shareholders. Monitor the application of the rules of such schemes and the overall aggregate amount of the awards
  • Determine the remuneration of all Executive Directors, the Chairman and certain senior managers within the agreed policy, taking into account remuneration trends across the Company and remuneration practices in other peer companies
  • Maintain contact with principal stakeholders, as required, on matters relating to remuneration

Terms of reference

The Committee reviewed its terms of reference during the year and no amendments were made.

Download the Remuneration Committee Terms of Reference 

Activities

The Committee met five times in 2017. The Committee reviewed the Group’s financial performance and the achievements of the Executive Directors, and conducted a review of the remuneration arrangements for Executive Directors. The Remuneration Policy was approved at the 2017 AGM, and no changes have been made to the policy this year. 

Key outcomes

 

  • The Committee reviewed the Group’s financial performance during 2017, as well as the achievements of the Executive Directors against the targets under their balanced scorecards
  • The business delivered very strongly against our cash flow targets and against the net profit goals. Performance on new orders, while representing an improvement in a very competitive market, nevertheless fell short of the stretching targets we set at the start of the year. When coupled with consideration of the Executive Directors’ performance against the targets of their personal balanced scorecards, annual bonus out-turns for the CEO and CFO were 60.4% and 70.4% of maximum, respectively
  • In May 2017, the Group Chief Operating Officer, Marwen Chedid resigned from the Board. He has received a pro-rated annual bonus for 2017, based on the same financial results as the other Executive Directors and an assessment of his personal performance during the first five months of the year. Mr Chedid has agreed that this bonus payment be subject to a clawback provision
  • The performance period for the 2015 Performance Share Plan (PSP) cycle ended on 31 December 2017. Based on performance against the three-year relative TSR and EPS targets, the awards lapsed in full

Key highlights for 2018

  • In 2018 we will continue to operate our remuneration agreements in line with the Policy agreed at the 2017 AGM
  • In line with the wider employee population, Executive Directors will receive a salary increase of 3% in 2018. This represents Mr Asfari’s first salary increase in four years, and Mr Cochran’s first increase since appointment in 2016. No other changes are being made to the Executive Directors’ remuneration arrangements
  • From January 2018, the Non-executive Director fee will increase to £75,000 and the fee for the Chairman will increase to £320,000, representing the first increases since July 2014. There will be no increase in these fees for the next three years. The Non-executive Directors and Chairman will use a portion of their fees to purchase Petrofac shares on the open market.

The full 2017 Directors' Remuneration Report is available to download and contains the Remuneration Policy summary. The full Remuneration Policy is available to download in the 2016 Annual Report and Accounts.

Matthias Bichsel, Chairman of the Remuneration Committee