BP 2012 Annual Report Download - page 252

40. Share-based payments continued
Restricted share unit plans
Share unit grants under the Restricted Share Plan (RSP) are used in special circumstances such as recruitment and retention of senior employees and
normally have no performance conditions.
Share unit grants under BP’s other restricted share plans typically take into account the employee’s performance in either the current or the prior year,
track record of delivery, business and leadership skills and potential. Plans included in this category are the Executive Performance Plan (EPP), the
Performance Share Plan (PSP) (no further grants to be made under these plans after 2011) and the Deferred Annual Bonus Plan (DAB).
BP Share Option Plan (BPSOP)
Share options with an exercise price equivalent to the closing market price of a BP share immediately preceding the date of grant were granted to
participants annually until 2006. These options are not subject to any performance conditions and are exercisable between the third and tenth
anniversaries of the grant date.
BP Plan 2011
Share options with an exercise price equivalent to the closing market price of a BP share immediately preceding the date of grant were granted to
participants in 2011. These options are not subject to any performance conditions and will be exercisable between the third and tenth anniversaries of
the grant date, with special arrangements applying to participants who leave employment for qualifying reasons.
Matching and saving plans
BP ShareMatch plans
These matching share plans give employees the opportunity to buy ordinary shares in BP p.l.c. and receive free matching shares in BP p.l.c., up to a
predetermined limit. The plans are run in the UK and in more than 50 other countries.
BP ShareSave Plan
This plan is open to all eligible UK employees. Participants can contribute up to a maximum of £250 per month from their net salary to a savings account
over a three- or five-year contractual savings period. At the end of the savings period, they are entitled to purchase shares in BP p.l.c. at a preset price
determined on the date when the invitations are sent to eligible employees. This price is usually set at a discount to the market price of a share of up to
20%.
Local plans
In some countries, BP provides local scheme benefits, the rules and qualifications for which vary according to local circumstances. Certain US
employees may participate in a defined contribution (401k) plan in which BP matches employee contributions up to certain limits. Participants may
invest in several investment options including a BP Stock Fund that holds BP ADSs and a small percentage of cash.
Share option transactions
Details of share option transactions for the year under the share option plans are as follows:
2012 2011 2010
Share option transactions
Number
of
options
Weighted
average
exercise price
$
Number
of
options
Weighted
average
exercise price
$
Number
of
options
Weighted
average
exercise price
$
Outstanding at 1 January 374,500,712 7.73 263,306,722 8.75 295,895,357 8.73
Granteda17,651,908 5.01 152,472,556 6.03 10,420,287 6.08
Forfeited (17,501,294) 6.55 (9,058,406) 7.22 (9,499,661) 7.88
Exercised (11,588,295) 6.46 (2,502,306) 7.64 (31,839,034) 7.97
Expired (38,966,978) 8.29 (29,717,854) 8.26 (1,670,227) 8.71
Outstanding at 31 Decemberb324,096,053 7.62 374,500,712 7.73 263,306,722 8.75
Exercisable at 31 December 159,419,041 9.33 209,776,014 9.01 242,530,635 8.90
aShare options granted during 2011 include 142.5 million options awarded under the BP Plan 2011 with a fair value of $1.02 per option at the date of grant, determined using a binomial option pricing
model including assumptions for share price volatility, dividends, and cancellations.
bShare options outstanding at 31 December 2012 include 158 million options granted under the BPSOP (2011 208 million options and 2010 239 million options).
The weighted average share price at the date of exercise was $7.20 (2011 $7.71 and 2010 $9.54).
For options outstanding at 31 December 2012, the exercise price ranges and weighted average remaining contractual lives were as shown below.
Options outstanding Options exercisable
Range of exercise prices
Number
of
shares
Weighted
average
remaining life
Years
Weighted
average
exercise price
$
Number
of
shares
Weighted
average
exercise price
$
$5.01 – $6.73 183,757,213 6.77 5.96 26,176,779 6.35
$6.74 – $8.45 49,881,487 2.08 7.83 43,881,487 7.94
$8.46 – $10.18 19,099,639 1.93 9.89 18,237,061 9.93
$10.19 – $11.92 71,357,714 2.80 11.13 71,123,714 11.13
324,096,053 4.89 7.62 159,419,041 9.33
At 31 December 2012 the quoted value of one BP ordinary share was $6.86.
250 Financial statements
BP Annual Report and Form 20-F 2012