BP 2007 Annual Report Download - page 201

BP ANNUAL REPORT AND ACCOUNTS 2007 199
11 Share-based payments continued
Local Plans
In some countries, BP provides local scheme benefits, the rules and qualifications for which vary according to local circumstances.
The above share plans are indicated as being equity-settled. However in certain countries it is not possible to award shares to employees owing to
local legislation. In these instances the award will be settled in cash, calculated as the cash equivalent of the value to the employee of an
equity-settled plan.
Cash plans
Cash settled share-based payments/Stock Appreciation Rights (SARs)
These are cash-settled share-based payments available to certain employees that require the group to pay the intrinsic value of the cash
option/SAR/restricted shares to the employee at the date of exercise/maturity. The cash options/SARs have the same rules as the BPSOP plan and
the cash restricted share plans (MTPP, DAB, PSP, RSP) have the same rules as their equity-settled counterparts.
Employee Share Ownership Plans (ESOPs)
ESOPs have been established to acquire BP shares to satisfy any awards made to participants under EDIP, MTPP, LTPP, DAB and the BP
ShareMatch Plans. The ESOPs have waived their rights to dividends on shares held for future awards and are funded by the group. Until such time as
the company’s own shares held by the ESOP trusts vest unconditionally in employees, the amount paid for those shares is deducted in arriving at
shareholders’ equity. See Note 8, Capital and reserves. Assets and liabilities of the ESOPs are recognized as assets and liabilities of the group.
At 31 December 2007, the ESOPs held 6,448,838 shares (2006 12,795,887 shares and 2005 14,560,003 shares) for potential future awards, which
had a market value of $79 million (2006 $142 million and 2005 $156 million).
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Share option transactions 2007 2006 2005
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Weighted Weighted Weighted
Number average Number average Number average
of exercise price of exercise price of exercise price
options $ options $ options $
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Outstanding at beginning of the year 426,471,462 8.25 450,453,502 7.64 470,263,808 7.16
Granted during the year 6,004,025 9.11 53,977,639 11.18 54,482,053 10.24
Forfeited during the year (3,924,714) 9.10 (7,169,710) 8.69 (4,844,827) 8.30
Exercised during the year (69,715,558) 6.94 (70,658,480) 6.52 (68,687,976) 6.40
Expired during the year (740,972) 8.68 (131,489) 7.99 (759,556) 6.75
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Outstanding at end of the year 358,094,243 8.51 426,471,462 8.25 450,453,502 7.64
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Exercisable at the end of the year 238,707,055 7.70 236,726,966 7.41 222,729,398 7.54
As share options are exercised continuously throughout the year, the weighted average share price during the year of $11.72 (2006 $11.85 and 2005
$10.77) is representative of the weighted average share price at the date of exercise. For the options outstanding at 31 December 2007, the exercise
price ranges and weighted average remaining contractual lives are shown below.
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Options outstanding Options exercisable
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Weighted Weighted Weighted
Number average average Number average
of remaining life exercise price of exercise price
Range of exercise prices shares years $ shares $
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$5.10 – $6.79 66,360,194 3.88 6.15 55,509,664 6.23
$6.80 – $8.50 162,364,928 4.00 8.02 156,236,204 8.04
$8.51 – $10.21 55,021,656 4.89 9.28 26,961,187 8.78
$10.22 – $11.92 74,347,465 7.80 11.13 – –
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358,094,243 4.90 8.51 238,707,055 7.70