BP 2008 Annual Report Download - page 206

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Financial statements
BP Annual Report and Accounts 2008
Parent company financial statements of BP p.l.c.
11. Share-based payments continued
At 31 December 2008 the ESOPs held 29,051,082 shares (2007 6,448,838 shares and 2006 12,795,887 shares) for potential future awards, which had
a market value of $220 million (2007 $79 million and 2006 $142 million).
Share option transactions 2008 2007 2006
Weighted Weighted Weighted
average average average
Number exercise Number exercise Number exercise
of price of price of price
options $ options $ options $
Outstanding at 1 January 358,094,243 8.51 426,471,462 8.25 450,453,502 7.64
Granted 8,062,899 8.96 6,004,025 9.11 53,977,639 11.18
Forfeited (2,502,784) 8.50 (3,924,714) 9.10 (7,169,710) 8.69
Exercised (37,277,895) 6.97 (69,715,558) 6.94 (70,658,480) 6.52
Expired (121,864) 7.00 (740,972) 8.68 (131,489) 7.99
Outstanding at 31 December 326,254,599 8.70 358,094,243 8.51 426,471,462 8.25
Exercisable at 31 December 260,178,938 8.22 238,707,055 7.70 236,726,966 7.41
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
average average average
Number remaining exercise Number exercise
of life price of 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
ShareSave ShareSave
Options granted in 2008 3 year 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
ShareSave ShareSave
Options granted in 2007 3 year 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
205