BP 2007 Annual Report Download - page 167

BP ANNUAL REPORT AND ACCOUNTS 2007 165
43 Remuneration of directors and senior management continued
Office facilities for former chairmen and deputy chairmen
It is customary for the company to make available to former chairmen and deputy chairmen, who were previously employed executives, the use of
office and basic secretarial facilities following their retirement. The cost involved in doing so is not significant.
Further information
Full details of individual directors’ remuneration are given in the directors’ remuneration report on pages 63-73.
Remuneration of senior management $ million
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2007 2006 2005
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Total for all senior management
Short-term employee benefits 37 30 25
Post-retirement benefits 74
Share-based payments 22 26 27
Senior management, in addition to executive and non-executive directors, includes other senior managers who are members of the executive
management team.
Short-term employee benefits
In addition to fees paid to the non-executive chairman and non-executive directors, these amounts comprise, for executive directors and senior
managers, salary and benefits earned during the year, plus bonuses awarded for the year. This includes an ex gratia superannuation payment of
$3 million (2006 and 2005 nil) and compensation for loss of office of $1 million (2006 $5 million, 2005 nil).
Post-retirement benefits
The amounts represent the estimated cost to the group of providing defined benefit pensions and other post-retirement benefits to senior
management in respect of the current year of service measured in accordance with IAS 19 ‘Employee Benefits’.
Share-based payments
This is the cost to the group of senior management’s participation in share-based payment plans, as measured by the fair value of options and shares
granted accounted for in accordance with IFRS 2 ‘Share-based Payments’. The main plans in which senior management have participated are the
EDIP, MTPP and LTPP. For details of these plans refer to Note 41.
44 Contingent liabilities
There were contingent liabilities at 31 December 2007 in respect of guarantees and indemnities entered into as part of the ordinary course of the
group’s business. No material losses are likely to arise from such contingent liabilities. Further information is included in Note 28.
Approximately 200 lawsuits were filed in State and Federal Courts in Alaska seeking compensatory and punitive damages arising out of the Exxon
Valdez oil spill in Prince William Sound in March 1989. Most of those suits named Exxon (now ExxonMobil), Alyeska Pipeline Service Company
(Alyeska), which operates the oil terminal at Valdez, and the other oil companies that own Alyeska. Alyeska initially responded to the spill until the
response was taken over by Exxon. BP owns a 47% interest (reduced during 2001 from 50% by a sale of 3% to Phillips) in Alyeska through a
subsidiary of BP America Inc. and briefly indirectly owned a further 20% interest in Alyeska following BP’s combination with Atlantic Richfield
Company (Atlantic Richfield). Alyeska and its owners have settled all the claims against them under these lawsuits. Exxon has indicated that it may file
a claim for contribution against Alyeska for a portion of the costs and damages which it has incurred. If any claims are asserted by Exxon that affect
Alyeska and its owners, BP will defend the claims vigorously. It is not possible to estimate any financial effect.
Since 1987, Atlantic Richfield, a current subsidiary of BP, has been named as a co-defendant in numerous lawsuits brought in the US alleging injury
to persons and property caused by lead pigment in paint. The majority of the lawsuits have been abandoned or dismissed as against Atlantic Richfield.
Atlantic Richfield is named in these lawsuits as alleged successor to International Smelting & Refining, which, along with a predecessor company,
manufactured lead pigment during the period 1920-1946. Plaintiffs include individuals and governmental entities. Several of the lawsuits purport to be
class actions. The lawsuits (depending on plaintiff) seek various remedies, including: compensation to lead-poisoned children; cost to find and remove
lead paint from buildings; medical monitoring and screening programmes; public warning and education on lead hazards; reimbursement of
government healthcare costs and special education for lead-poisoned citizens; and punitive damages. No lawsuit against Atlantic Richfield has been
settled nor has Atlantic Richfield been subject to a final adverse judgment in any proceeding. The amounts claimed and, if such suits were successful,
the costs of implementing the remedies sought in the various cases could be substantial. While it is not possible to predict the outcome of these legal
actions, Atlantic Richfield believes that it has valid defences and it intends to defend such actions vigorously and thus the incurrence of a liability by
Atlantic Richfield is remote. Consequently, BP believes that the impact of these lawsuits on the group’s results of operations, financial position or
liquidity will not be material.
In addition, various group companies are parties to legal actions and claims that arise in the ordinary course of the group’s business. While the
outcome of such legal proceedings cannot be readily foreseen, BP believes that they will be resolved without material effect on the group’s results of
operations, financial position or liquidity. The group files income tax returns in many jurisdictions throughout the world. Various tax authorities are
currently examining the group’s income tax returns. Tax returns contain matters that could be subject to differing interpretations of applicable taxlaws
and regulations and the resolution of tax positions through negotiations with relevant tax authorities, or through litigation, can take several years to
complete. While it is difficult to predict the ultimate outcome in some cases, the group does not anticipate that there will be any material impact on
the group’s results of operations, financial position or liquidity.
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