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

Parent company financial statements of BP p.l.c.11. Share-based payments continuedRestricted 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 participantsannually until 2006. These options are not subject to any performance conditions and are exercisable between the third and tenth anniversaries of thegrant 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. From 1 January2012, 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.Share option transactionsDetails of share option transactions for the year under the share options plans are as follows:Share option transactions 2011 2010NumberofoptionsWeightedaverageexercise price$NumberofoptionsWeightedaverageexercise price$Outstanding at 1 January 263,306,722 8.75 295,895,357 8.73Granted a 152,472,556 6.03 10,420,287 6.08Forfeited (9,058,406) 7.22 (9,499,661) 7.88Exercised (2,502,306) 7.64 (31,839,034) 7.97Expired (29,717,854) 8.26 (1,670,227) 8.71Outstanding at 31 December 374,500,712 7.73 263,306,722 8.75Exercisable at 31 December 209,776,014 9.01 242,530,635 8.90aShare options granted during 2011 include 142.5 million options awarded under the BP Plan 2011 with a fair value of $1.02 per option at the date of grant, determined using a binomial option pricing modelincluding assumptions for share price volatility, dividends and cancellations.The weighted average share price at the date of exercise was $7.71 (2010 $9.54 and 2009 $9.10).For options outstanding at 31 December 2011, the exercise price ranges and weighted average remaining contractual lives were as shown below:Options outstanding aOptions exercisableNumberofsharesWeightedaverageremaining lifeYearsWeightedaverageexercise price$NumberofsharesWeightedaverageexercise price$Range of exercise prices$5.66 – $7.22 199,571,741 7.51 6.11 37,283,772 6.37$7.23 – $8.79 81,608,110 1.21 8.13 81,608,110 8.13$8.80 – $10.35 22,264,187 2.73 9.83 19,827,458 9.92$10.36 – $11.92 71,056,674 3.81 11.14 71,056,674 11.14374,500,712 5.15 7.73 209,776,014 9.01aIncluded within options outstanding at 31 December 2011 are options granted annually under the BPSOP until 2006 of 208 million options (2010 239 million options).The parent company financial statements of BP p.l.c. on pages PC1 – PC14 do not form part of BP’s Annual Report on Form 20-F as filed with the SEC.PC12 BP Annual Report and Form 20-F 2011