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

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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
Parent company financial statements of BP p.l.c.11. Share-based payments continuedFair values and associated details for restricted share units grantedFor restricted share units granted in 2011, the number of units and weighted average fair value at the date of grant were as shown below:Restricted share units granted in 2011 CPP EPP RSP DAB PSPNumber of restricted share units granted (million) 1.4 8.9 20.0 17.5 19.2Weighted average fair value $11.99 $7.51 $6.86 $7.51 $7.51Fair value measurement basisMonteCarloMarketvalueMarketvalueMarketvalueMarketvalueRestricted share units granted in 2010 CPP EPP RSP DAB PSPNumber of restricted share units granted (million) 1.3 7.6 21.4 24.5 16.0Weighted average fair value $19.81 $9.43 $6.78 $9.43 $9.43Fair value measurement basisMonteCarloMarketvalueMarketvalueMarketvalueMarketvalueThe group uses the observable market price for ordinary shares at the date of grant to determine the fair value of non-TSR restricted share units.The group used a Monte Carlo simulation to determine the fair values of the TSR elements of the 2011, 2010 and 2009 CPP and EDIP grants andthe 2009 PSP grant. In accordance with the plans’ rules, the model simulates BP’s TSR and compares it against its principal strategic competitors over thethree-year period of the plans. The model takes into account the historical dividends, share price volatilities and covariances of BP and each comparatorcompany to produce a predicted distribution of relative share performance. This is applied to the reward criteria to give an expected value of the TSRelement.Accounting expense does not necessarily represent the actual value of share-based payments made to recipients, which are determined by theremuneration committee according to established criteria.Employee Share Ownership Plan Trusts (ESOPs)ESOPs have been established to acquire BP shares to satisfy any awards made to participants under the BP share plans as required. The ESOPs havewaived 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 theESOPs vest unconditionally to employees, the amount paid for those shares is shown as a reduction in shareholders’ equity (see Note 8). Assets andliabilities of the ESOPs are recognized as assets and liabilities of the group.At 31 December 2011 the ESOPs held 27,784,503 shares (2010 11,477,253 shares and 2009 18,062,246 shares) for potential future awards,which had a market value of $197 million (2010 $82 million and 2009 $174 million).12. Auditor’s remunerationFees payable to the company’s auditors for the audit of the company’s accounts were $15 million (2010 $17 million).Remuneration receivable by the company’s auditors for the supply of other services to the company is not presented in the parent companyfinancial statements as this information is provided in the consolidated financial statements.Financial statementsThe 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.BP Annual Report and Form 20-F 2011 PC13
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Cover imagePhotograph of DeepseaSta
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Cross reference to Form 20-FPageIte
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Miscellaneous termsIn this document
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6 BP Annual Report and Form 20-F 20
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Chairman’s letterCarl-Henric Svan
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During the year, the remuneration c
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Business review: Group overviewBP A
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SafetyDuring the year, we reorganiz
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In Refining and Marketing, our worl
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Crude oil and gas prices,and refini
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In detailFor more information, seeR
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Our market: Longer-term outlookThe
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BP’s distinctive capabilities and
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Technology will continue to play a
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In detailFor more information,see C
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In detailFind out more online.bp.co
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BP Annual Report and Form 20-F 2011
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Below BP has asignificant presencei
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What you can measure6 Active portfo
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Business review: Group overview2012
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Our risk management systemOur enhan
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Our current strategic priorities ar
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Our performance2011 was a year of f
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Left BP employeesat work in Prudhoe
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We continued to sell non-core asset
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Reported recordableinjury frequency
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Business reviewBP in more depth56 F
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Business reviewThe primary addition
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Business reviewRisk factorsWe urge
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Business review2010. Similar action
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Business reviewBusiness continuity
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Business reviewSafetyOver the past
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Business reviewour review of all th
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Business reviewGreenhouse gas regul
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Business reviewresources such as dr
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Business reviewExploration and Prod
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Business reviewCompleting the respo
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Business reviewgrants, which were s
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Business reviewOur performanceKey s
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Business reviewwere in Russia (Oren
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Business reviewCanadaIn Canada, BP
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Business review• In March 2011, T
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Business reviewaccess advantageous
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Business reviewBP’s vice presiden
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Business reviewhttp://www.bp.com/do
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Business reviewbalance of participa
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Business reviewAcquisitions and dis
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Business reviewLPGOur global LPG ma
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Business reviewOther businesses and
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Business reviewLiquidity and capita
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Business reviewThe group expects it
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Business reviewFrequently, work (in
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Business reviewHazardous and Noxiou
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Business reviewpart of a larger por
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Directors andsenior management114 D
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Directors and senior managementDire
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Directors and senior managementH L
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Corporate governanceCorporate gover
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Corporate governanceAntony Burgmans
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Corporate governanceBoard oversight
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Corporate governanceBoard and commi
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Corporate governancefinancial repor
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Corporate governancechairs and secr
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Corporate governance• Oversee GCR
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Corporate governanceCommittee’s r
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Corporate governanceControls and pr
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Corporate governanceThe Act require
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Directors’ remuneration reportRem
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Directors’ remuneration reportSum
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Directors’ remuneration reportSaf
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Directors’ remuneration reportRem
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Directors’ remuneration reportThe
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Directors’ remuneration reportSha
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Directors’ remuneration reportNon
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Additional informationfor sharehold
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Additional information for sharehol
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Financial statements174 Statement o
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Consolidated financial statements o
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Notes on financial statements1. Sig
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Notes on financial statementshttp:/
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Notes on financial statements3. Bus
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Notes on financial statements5. Dis
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Notes on financial statements7. Int
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Notes on financial statements10. Im
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Notes on financial statements15. Ex
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Notes on financial statements26. Fi
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Notes on financial statements29. Tr
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Notes on financial statements33. De
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Notes on financial statements36. Pr
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Notes on financial statements37. Pe
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Notes on financial statements38. Ca
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BP Annual Report and Form 20-F 2011 - Company Reporting

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