BP 2011 Annual Report Download - page 248

246 BP Annual Report and Form 20-F 2011
Notes on financial statements
40. Share-based payments
Effect of share-based payment transactions on the group’s result and financial position
$million
2011 2010 2009
Total expense recognized for equity-settled share-based payment transactions 579 577 506
Total expense (credit) recognized for cash-settled share-based payment transactions 5(1) 15
Total expense recognized for share-based payment transactions 584 576 521
Closing balance of liability for cash-settled share-based payment transactions 12 16 32
Total intrinsic value for vested cash-settled share-based payments 1 1 7
For ease of presentation, options and shares detailed in the tables within this note are stated as UK ordinary share equivalents in US dollars. US
employees are granted American Depositary Shares (ADSs) or options over the company’s ADSs (one ADS is equivalent to six ordinary shares). The main
share-based payment plans that existed during the year are detailed below.
Plans for executive directors
For further information on the Executive Directors’ Incentive Plan (EDIP) see the Directors’ remuneration report on pages 139 to 151.
Plans for senior employees
The group operates a number of equity-settled share plans under which share units are granted to its senior leaders and certain other employees. These
plans typically have a three-year performance or restricted period during which the units accrue net notional dividends which are treated as having been
reinvested. Leaving employment will normally preclude the conversion of units into shares, but special arrangements apply for participants that leave for
qualifying reasons. Grants are settled in cash where the regulatory environment prohibits participants to hold BP shares.
Performance unit plans
The number of units granted is related to the level of seniority of employees. The number of units converted to shares is determined by reference to
performance measures over the three-year performance period. The main performance measure used is BP’s total shareholder return (TSR) compared to
the other oil majors. Plans included in this category are the Competitive Performance Plan (CPP) and, in part, the Performance Share Plan (PSP).
Restricted share unit plans
Share unit grants under BP’s restricted 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. One restricted share unit plan for senior employees, used in special circumstances such as
recruitment and retention, normally has no performance conditions. Plans included in this category are the Executive Performance Plan (EPP), the
Restricted Share Plan (RSP), the Deferred Annual Bonus Plan (DAB) and, in part, the Performance Share Plan (PSP).
BP Share Option Plan (BPSOP)
Share options with an exercise price equivalent to the 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 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.
Share Value Plan
In 2012, the group will launch a new performance plan known as the Share Value Plan (SVP) which will grant restricted share units with a three-year
performance period. The number of units granted is dependent on grade and country of operation. The performance measures are grade specific and
include individual rating, balanced scorecard and TSR criteria. For the 2012 performance year, no further grants will be made under DAB; and from
1 January 2012, no further grants will be made under CPP, EPP or PSP.
Other plans
For further information on BP’s savings and matching plans, including the BP ShareMatch plans and the BP ShareSave Plan, see page 158.