BP 2008 Annual Report Download - page 172

Download and view the complete annual report

Please find page 172 of the 2008 BP annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 211

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172
  • 173
  • 174
  • 175
  • 176
  • 177
  • 178
  • 179
  • 180
  • 181
  • 182
  • 183
  • 184
  • 185
  • 186
  • 187
  • 188
  • 189
  • 190
  • 191
  • 192
  • 193
  • 194
  • 195
  • 196
  • 197
  • 198
  • 199
  • 200
  • 201
  • 202
  • 203
  • 204
  • 205
  • 206
  • 207
  • 208
  • 209
  • 210
  • 211

Financial statements
BP Annual Report and Accounts 2008
Notes on financial statements
41. Share-based payments continued
As share options are exercised continuously throughout the year, the weighted average share price during the year of $10.87 (2007 $11.72 and 2006
$11.85) is representative of the weighted average share price at the date of exercise. For the options outstanding at 31 December 2008, the exercise
price ranges and weighted average remaining contractual lives are shown below.
` Options outstanding Options exercisable
Weighted Weighted Weighted
Number average average Number average
of remaining life exercise price of exercise price
Range of exercise prices shares Years $ shares $
$5.71 – $7.25 51,430,951 3.81 6.39 48,919,680 6.35
$7.26 – $8.80 159,708,260 3.12 8.11 157,933,135 8.11
$8.81 – $10.36 42,960,673 4.53 9.53 26,083,268 9.83
$10.37 – $11.92 72,154,715 6.81 11.14 27,242,855 10.67
326,254,599 4.23 8.70 260,178,938 8.22
Fair values and associated details for options and shares granted
Options granted in 2008 ShareSave 3 year ShareSave 5 year
Option pricing model used Binomial Binomial
Weighted average fair value $1.82 $1.74
Weighted average share price $11.26 $11.26
Weighted average exercise price $9.70 $9.70
Expected volatility 23% 23%
Option life 3.5 years 5.5 years
Expected dividends 4.60% 4.60%
Risk free interest rate 5.00% 5.00%
Expected exercise behaviour 100% year 4 100% year 6
Options granted in 2007 ShareSave 3 year ShareSave 5 year
Option pricing model used Binomial Binomial
Weighted average fair value $3.57 $3.79
Weighted average share price $12.10 $12.10
Weighted average exercise price $9.13 $9.13
Expected volatility 21% 21%
Option life 3.5 years 5.5 years
Expected dividends 3.48% 3.48%
Risk free interest rate 5.75% 5.75%
Expected exercise behaviour 100% year 4 100% year 6
Options granted in 2006 BPSOP ShareSave 3 year ShareSave 5 year
Option pricing model used Binomial Binomial Binomial
Weighted average fair value $2.46 $2.88 $3.08
Weighted average share price $11.07 $11.08 $11.08
Weighted average exercise price $11.17 $9.10 $9.10
Expected volatility 22% 24% 24%
Option life 10 years 3.5 years 5.5 years
Expected dividends 3.23% 3.40% 3.40%
Risk free interest rate 4.50% 5.00% 4.75%
Expected exercise behaviour 5% years 4-9, 100% year 4 100% year 6
70% year 10
The group uses an appropriate valuation model of expected volatility of US ADSs for the quarter within which the grant date of the relevant plan falls.
Management is responsible for all inputs and assumptions in relation to that model, including the determination of expected volatility.
MTPP- MTPP- EDIP- EDIP-
Shares granted in 2008 TSR FCF TSR RET RSP DAB PSP
Number of equity instruments granted (million) 9.1 9.1 2.6 0.5 7.7 5.8 16.7
Weighted average fair value $5.07 $10.34 $4.55 $11.13 $8.83 $10.34 $12.89
Fair value measurement basis Monte Market Monte Market Market Market Monte
Carlo value Carlo value value value Carlo
171