BP Annual Report and Form 20-F 2011 - Company Reporting

Notes on financial statements40. Share-based paymentsEffect of share-based payment transactions on the group’s result and financial position$million2011 2010 2009Total expense recognized for equity-settled share-based payment transactions 579 577 506Total expense (credit) recognized for cash-settled share-based payment transactions 5 (1) 15Total expense recognized for share-based payment transactions 584 576 521Closing balance of liability for cash-settled share-based payment transactions 12 16 32Total intrinsic value for vested cash-settled share-based payments 1 1 7For ease of presentation, options and shares detailed in the tables within this note are stated as UK ordinary share equivalents in US dollars. USemployees are granted American Depositary Shares (ADSs) or options over the company’s ADSs (one ADS is equivalent to six ordinary shares). The mainshare-based payment plans that existed during the year are detailed below.Plans for executive directorsFor further information on the Executive Directors’ Incentive Plan (EDIP) see the Directors’ remuneration report on pages 139 to 151.Plans for senior employeesThe group operates a number of equity-settled share plans under which share units are granted to its senior leaders and certain other employees. Theseplans typically have a three-year performance or restricted period during which the units accrue net notional dividends which are treated as having beenreinvested. Leaving employment will normally preclude the conversion of units into shares, but special arrangements apply for participants that leave forqualifying reasons. Grants are settled in cash where the regulatory environment prohibits participants to hold BP shares.Performance unit plansThe number of units granted is related to the level of seniority of employees. The number of units converted to shares is determined by reference toperformance measures over the three-year performance period. The main performance measure used is BP’s total shareholder return (TSR) compared tothe 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 plansShare unit grants under BP’s restricted plans typically take into account the employee’s performance in either the current or the prior year, track recordof delivery, business and leadership skills and potential. One restricted share unit plan for senior employees, used in special circumstances such asrecruitment and retention, normally has no performance conditions. Plans included in this category are the Executive Performance Plan (EPP), theRestricted 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 annuallyuntil 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 2011Share options with an exercise price equivalent to the market price of a BP share immediately preceding the date of grant were granted to participants in2011. 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 PlanIn 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-yearperformance period. The number of units granted is dependent on grade and country of operation. The performance measures are grade specific andinclude individual rating, balanced scorecard and TSR criteria. For the 2012 performance year, no further grants will be made under DAB; and from1 January 2012, no further grants will be made under CPP, EPP or PSP.Other plansFor further information on BP’s savings and matching plans, including the BP ShareMatch plans and the BP ShareSave Plan, see page 158.246 BP Annual Report and Form 20-F 2011