Statoil's remuneration policy 

Statoil's remuneration policy is strongly linked to the company's value-based performance framework. Certain key principles have been adopted for the design of the company's remuneration concept. These principles pertain in general but they are applied differently to the different remuneration systems and job categories.

The remuneration concept shall;

  • reflect our competitive market strategy and local market conditions
  • strengthen the common interests of people in the Statoil group and its shareholders
  • be in accordance with statutory regulations and good corporate governance
  • be fair, transparent and non-discriminatory
  • reward and recognise delivery and behaviour equally
  • differentiate on the basis of responsibilities and performance
  • reward both short-term and long-term contributions and results.

Our rewards and recognition are designed to attract and retain people who perform, change and learn. The overall remuneration level and composition of the total reward reflect the national and international framework and business environment Statoil operates within.

The decision-making process

The decision-making process for changing remuneration policies and concepts and the determination of salaries and other remuneration of the corporate executive committee are in accordance with the provisions of the Norwegian Public Limited Liability Companies Act sections 5-6, 6-14, 6-16 a) and the board's Rules of Procedures as last amended on 31 July 2008.

The remuneration concept for the corporate executive committee

Statoil's remuneration concept for the corporate executive committee consists of the following main elements: 

  • Fixed remuneration
  • Variable pay
  • Pensions and insurance schemes
  • Severance pay arrangements
  • Other benefits.

Fixed remuneration

Fixed remuneration consists of base salary and a long-term incentive.

Base salary
The base salary shall be competitive in the markets in which the company operates and shall reflect the individual's responsibility and performance. The evaluation of performance is based on fulfilment of certain pre-defined goals; refer to "Variable pay" below. The base salary is normally reviewed once a year.

Long-term incentive (LTI)
Statoil will carry on the established long-term incentive system for a limited number of senior managers, including the members of the corporate executive committee.

The LTI system is a fixed, monetary compensation calculated in per cent of the participant's base salary; ranging from 20 to 30% depending on the participant's position. The participant is obliged to buy Statoil shares in the market for the fixed LTI amount (after tax deduction) every year and to hold the shares for a lock-in period of three years.

The LTI and the annual variable pay system constitute a remuneration concept that focuses on both short-term and long-term goals and results. The LTI contributes to strengthening the common interests between the top management and the shareholders of Statoil.

Variable pay

The intention is to continue the company's variable pay concept in 2010. Based on performance, the chief executive officer is entitled to annual variable pay with a maximum potential of 50% of the fixed remuneration. The executive vice presidents have an equivalent variable pay scheme with a maximum potential of 40%.

In order to obtain an improved distribution of the annual variable pay, and to underpin a drive towards an even stronger performance, it has been decided to adjust the pay out level for performance at target level from 67 per cent to 50 per cent of the maximum potential.

Remuneration policies' effect on risk

The remuneration concept is an integrated part of our performance management system. An overarching principle is that there should be a close link between performance and remuneration.

Individual salary and annual variable pay reviews shall be based on the performance evaluation in our performance management system. However, participation in the LTI scheme and the size of the annual LTI element are not directly based on performance but linked to the executive's position level.

The goals forming the basis for the performance assessment are established between the manager and the employee as part of our performance management process. The performance goals have two dimensions: delivery and behaviour, where delivery and behaviour are equally important and given equal weight. Delivery goals are established for each of the five perspectives: HSE, finance, operations, market, people and organisation. In each perspective, both longer-term strategic objectives and shorter-term targets and Key Performance Indicator (KPI) targets are set, as well as actions to be executed. Several of these actions will be risk-mitigating actions derived from strategic or operational risk assessments. Behaviour goals are based on Statoil's core values and leadership principles and address the behaviour required and expected in order to achieve our delivery goals

Performance evaluation is a holistic evaluation combining measurement and assessment of performance against both delivery and behaviour goals. Hence, sound judgement and hindsight information are applied before final conclusions are drawn. For instance, measured KPI results are reviewed in relation to their strategic contribution, sustainability and significant changes in assumptions.

This balanced scorecard approach, with goals defined in both the delivery and behaviour dimension, and a holistic performance evaluation, should significantly reduce the risk that our remuneration policies are likely to have a material adverse effect.

In the performance contracts of the chief executive officer and chief financial officer, one of several targets is related to the company's relative total shareholder return (TSR). The amount of the annual variable pay is decided on the basis of an overall assessment of the achieving of various targets, including but not limited to the company's relative TSR.

Statement regarding remuneration

The board's statement regarding all remuneration of the corporate executive committee, as well as information about all remuneration paid to each member of the executive committee, is presented in the parent company financial statements, note 6.