BP 2006 Annual Report Download - page 168

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44 Share-based payments continued
The group used a Monte Carlo simulation to fair value the TSR element of the 2006 and 2005 MTPP and EDIP plans. In accordance with the rules of the
plans the model simulates BP’s TSR and compares it against our principal strategic competitors over the three-year period of the plans. The model takes
into account the historic dividends, share price volatilities and covariances of BP and each comparator company to produce a predicted distribution of
relative share performance. This is applied to the reward criteria to give an expected value of the TSR element.
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Shares granted in 2004 LTPP-
SHRAM
LTPP-
EPS/ROACE
EDIP-
SHRAM
EDIP-
EPS/ROACE RSP
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Number of equity instruments granted (million) 6.8 4.1 0.9 0.5 0.1
Weighted average fair value $4.06 $7.21 $4.06 $7.21 $8.12
Fair value measurement basis Monte Carlo Market value Monte Carlo Market value Market value
The group used a Monte Carlo simulation to fair value the SHRAM element of the 2004 LTPP and EDIP plan. In accordance with the rules of the plan,
the model simulates BP’s SHRAM and compares it with the comparator companies (all companies in the FTSE All World Oil & Gas Index) over the
three-year period of the plan. The SHRAMs of the comparator companies have been determined from market data over the preceding three-year period.
The model takes into account the historic dividend yields, share price volatilities and covariances of BP and each comparator company to produce a
predicted distribution of relative share performance. This is applied to the reward criteria to give an expected value of the SHRAM element.
Accounting expense does not necessarily represent the actual value of share-based payments made to recipients which are determined by the
Remuneration Committee according to established criteria.
45 Employee costs and numbers
$ million
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Employee costs 2006 2005 2004
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Wages and salaries 8,411 8,695 7,922
Social security costs 751 754 667
Share-based payments 419 368 325
Pension and other post-retirement benefit costs 770 929 1,051
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10,351 10,746 9,965
Innovene operations –(892) (898)
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Continuing operations 10,351 9,854 9,067
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Number of employees at 31 December 2006 2005 2004
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Exploration and Production 19,000 17,000 15,600
Refining and Marketinga69,500 70,800 69,800
Gas, Power and Renewables 4,500 4,100 4,000
Other businesses and corporate 4,000 4,300 13,500
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97,000 96,200 102,900
By geographical area
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UK 16,900 16,500 17,500
Rest of Europe 20,200 21,300 25,900
USA 33,700 34,400 36,900
Rest of World 26,200 24,000 22,600
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97,000 96,200 102,900
aIncludes 26,100 (2005 27,800 and 2004 27,900) service station staff.
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2006 2005
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Average number of employees UK
Rest of
Europe USA
Rest of
World Total UK
Rest of
Europe USA
Rest of
World Total
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Exploration and Production 3,300 700 6,100 8,100 18,200 3,000 600 5,300 7,300 16,200
Refining and Marketing 11,300 19,300 24,900 15,000 70,500 11,100 19,700 26,200 14,000 71,000
Gas, Power and Renewables 300 700 1,600 1,700 4,300 200 800 1,500 1,400 3,900
Other businesses and corporate 1,900 200 1,900 100 4,100 3,800 3,900 3,600 300 11,600
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16,800 20,900 34,500 24,900 97,100 18,100 25,000 36,600 23,000 102,700
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2004
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Average number of employees UK
Rest of
Europe USA
Rest of
World Total
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Exploration and Production 2,900 700 4,900 6,900 15,400
Refining and Marketing 10,300 19,200 27,200 12,900 69,600
Gas, Power and Renewables 200 800 1,400 1,600 4,000
Other businesses and corporate 3,700 4,800 5,700 1,000 15,200
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17,100 25,500 39,200 22,400 104,200