BP 2010 Annual Report Download - page 265
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ParentcompanynancialstatementsofBPp.l.c.
Financial statements
11.Share-basedpayments
Effect of share-based payment transactions on the company’s result and nancial position
$million
2010 2009 2008
Totalexpenserecognizedforequity-settledshare-basedpaymenttransactions 577 506 524
Totalexpense(credit)recognizedforcash-settledshare-basedpaymenttransactions (1) 15 (16)
Totalexpenserecognizedforshare-basedpaymenttransactions 576 521 508
Closingbalanceofliabilityforcash-settledshare-basedpaymenttransactions 16 32 21
Totalintrinsicvalueforvestedcash-settledshare-basedpayments 1 7 2
Foreaseofpresentation,optionandshareholdingsdetailedinthetableswithinthisnotearestatedasUKordinaryshareequivalentsinUSdollars.US
employeesaregrantedAmericanDepositaryShares(ADSs)oroptionsoverthecompany’sADSs(oneADSisequivalenttosixordinaryshares).The
share-basedpaymentplansthatexistedduringtheyeararedetailedbelow.Allplansareongoingunlessotherwisestated.
Plans for executive directors
ExecutiveDirectors’IncentivePlan(EDIP)–shareelement
Anequity-settledincentiveplanforexecutivedirectorswithathree-yearperformanceperiod.Forshareplanperformanceperiods2008-2010theawardof
sharesisdeterminedbycomparingBP’stotalshareholderreturn(TSR)againsttheotheroilmajors(ExxonMobil,Shell,TotalandChevron).Forthe
performanceperiod2009-2011theawardofsharesisdetermined50%onTSRversusacompetitorgroupofoilmajors(whichinthisperiodalsoincluded
ConocoPhillips)and50%onabalancedscorecard(BSC)ofthreeunderlyingperformancemeasuresversusthesamecompetitorgroup.Fortheperiod
2010-2012theawardofsharesisdeterminedonethirdonTSRversusacompetitorgroupofoilmajors(identicaltothe2009-2011plangroup)andtwo
thirdsonaBSCofthreeunderlyingperformanceindicators.Aftertheperformanceperiod,thesharesthatvest(netoftax)arethensubjecttoathree-year
retentionperiod.Thedirectors’remunerationreportonpages112to121includesfulldetailsoftheplan.
ExecutiveDirectors’IncentivePlan(EDIP)–deferredmatchingshareelement
FollowingtherenewaloftheEDIPatthe2010AnnualGeneralMeeting,adeferredmatchingshareelementisinplacerequiringamandatoryonethirdof
directors’annualbonustobedeferredintosharesforthreeyears.Thesharesarematchedbythecompanyonaone-for-onebasis.Vestingofbothdeferred
andmatchingsharesiscontingentonanassessmentofsafetyandenvironmentalsustainabilityoverthethree-yeardeferralperiodandadirectormay
voluntarilydeferanadditionalonethirdofbonusintosharesonthesameterms.
ExecutiveDirectors’IncentivePlan(EDIP)–shareoptionelement
Anequity-settledshareoptionplanforexecutivedirectorsthatpermitsoptionstobegrantedatanexercisepricenolowerthanthemarketpriceofashare
onthedatethattheoptionisgranted.Theoptionsareexercisableuptotheseventhanniversaryofthegrantdateandthelastgrantsweremadein2004.
From2005onwardstheremunerationcommittee’spolicyisnottomakefurthergrantsofshareoptionstoexecutivedirectors.
Plans for senior employees
Thegroupoperatesanumberofequity-settledshareplansunderwhichshareunitsaregrantedtoitsseniorleadersandcertainemployees.Theseplans
typicallyhaveathree-yearperformanceorrestrictedperiodduringwhichtheunitsaccruenetnotionaldividendswhicharetreatedashavingbeen
reinvested.Leavingemploymentduringthethree-yearperiodwillnormallyprecludetheconversionofunitsintoshares,butspecialarrangementsapply
wheretheparticipantleavesforaqualifyingreason.
GrantsaresettledincashwhereparticipantsarelocatedinacountrywhoseregulatoryenvironmentprohibitstheholdingofBPshares.
Performance unit plans
Thenumberofunitsgrantedismadebyreferencetolevelofseniorityoftheemployees.Thenumberofunitsconvertedtosharesisdeterminedbyreference
toperformancemeasuresoverthethree-yearperformanceperiod.ThemainperformancemeasureusedisBP’sTSRcomparedagainsttheotheroilmajors.In
addition,freecashow(FCF)isusedasaperformancemeasureforoneoftheperformanceplans.PlansincludedinthiscategoryaretheCompetitive
PerformancePlan(CPP),theMediumTermPerformancePlan(MTPP)and,inpart,thePerformanceSharePlan(PSP).
Restrictedshareunitplans
ShareunitgrantsunderBP’srestrictedplanstypicallytakeintoaccounttheemployee’sperformanceineitherthecurrentortheprioryear,trackrecordof
delivery,businessandleadershipskillsandlong-termpotential.Onerestrictedshareunitplanusedinspecialcircumstancesforsenioremployees,suchas
recruitmentandretention,normallyhasnoperformanceconditions.PlansincludedinthiscategoryaretheExecutivePerformancePlan(EPP),the
RestrictedSharePlan(RSP),theDeferredAnnualBonusPlan(DAB)and,inpart,thePerformanceSharePlan(PSP).
BPShareOptionPlan(BPSOP)
Shareoptionswithanexercisepriceequivalenttothemarketpriceofashareimmediatelyprecedingthedateofgrantweregrantedtoparticipants
annuallyuntil2006.Therewerenoperformanceconditionsandtheoptionsareexercisablebetweenthethirdandtenthanniversariesofthegrantdate.
Savings and matching plans
BPShareSavePlan
Thisisasavings-relatedshareoptionplanunderwhichemployeessaveonamonthlybasis,overathree-orve-yearperiod,towardsthepurchaseofshares
ataxedpricedeterminedwhentheoptionisgranted.Thispriceisusuallysetata20%discounttothemarketpriceatthetimeofgrant.Theoptionmustbe
exercisedwithinsixmonthsofmaturityofthesavingscontract;otherwiseitlapses.TheplanisrunintheUKandoptionsaregrantedannually,usuallyin
June.Participantsleavingforaqualifyingreasonhavesixmonthsinwhichtousetheirsavingstoexercisetheiroptionsonapro-ratedbasis.
TheparentcompanynancialstatementsofBPp.l.c.onpagesPC1–PC16donotformpartofBP’sAnnualReportonForm20-FasledwiththeSEC.
BPAnnualReportandForm20-F2010 PC13