The scorecard is made up of a collection of key performance indicators (KPIs) which indicate the Group’s overall health and performance across a range of operational, ﬁnancial and non-ﬁnancial measures.
The scorecard is central to Tullow’s approach to performance management and the 2016 indicators were agreed with the Board. Each year, targets within the scorecard may change to reﬂect the most material strategic objectives and
associated risks the Group faces, as well as measures to deliver on the longer-term strategy of the Company. Tullow’s performance against the scorecard is tracked and reviewed at quarterly performance management meetings, which are attended by Executive Directors and Senior Leaders. The Group’s ongoing performance is cascaded quarterly to staff through management brieﬁngs and internal communications.
The Group scorecard is used to determine Executive Directors’ and employees’ performance- related pay to ensure that all areas of the business are driving towards the same goals. Executive Directors’ and Vice Presidents' performance is judged solely on the delivery of the targets set in the Group scorecard, whereas the remainder of the permanent employees’ bonuses are based on a combination of individual and Group performance.
In April 2016, a decision was taken to increase the Company performance element of the Employee Bonus Plan from 20 per cent to 30 per cent for all employees in this plan, which is the majority of our employees. This change is designed to encourage more collaborative and team-based working, and reinforce that all employees contribute to the Group’s overall performance.
Each objective measured has a percentage weighting, and financial and production indicators have trigger, base and stretch performance targets. As reﬂected in the table below, in 2016, Tullow’s overall performance was 38.8 per cent. Although Tullow was the best performer in our peer group by some margin in 2016, the ‘relative’ Total Shareholder Return (TSR) tracks our performance over a three-year period and therefore we remain below the median and score nil of the possible score of 50 per cent.
However, the delivery of the majority of remaining targets reﬂects strong performance in maintaining liquidity, sustaining cash ﬂows, operating safely, reducing our costs and overall operational delivery. More detailed discussion on each KPI begins below.