BP (BP)

Note 39 — Long-term performance plans

        During 2004, the Company operated two long-term performance plans: the Executive Directors' Incentive Plan (EDIP) for executive directors and the Long Term Performance Plan (LTPP) for senior employees. Executive directors participated in the LTPP prior to 2002 or to their appointment as an executive director, whichever was the later. Both plans are incentive schemes under which the Company may award shares to participants or fund the purchase of shares for participants if long-term targets are met. Awards were made in 2004 in respect of the 2001-2003 LTPP. Further details of the plans are given in Item 6—Directors, Senior Management and Employees — Compensation on page 117.

        The costs of potential future awards for both the EDIP and LTPP are accrued over the three-year performance periods of each plan. The amount charged in 2004 was $89 million (2003 $94 million and 2002 $51 million). The value of awards under the 2001-2003 LTPP made in 2004 was $42 million (2000-2002 LTPP made in 2003 $35 million and 1999-2001 LTPP made in 2002 $125 million). Employees are able to defer the date of their potential award beyond the end of the performance period. The amount charged in respect of the increase in deferred awards after the expiry of the relevant performance periods was $23 million (2003 $17 million and 2002 $19 million).

        Employee Share Ownership Plans (ESOPs) have been established to acquire BP shares to satisfy any awards made to participants under the EDIP and LTPP and then to hold them for the participants during the retention period of the plan. In order to hedge the cost of potential future awards and deferred awards the ESOPs may, from time to time over the performance period of the plans, purchase BP shares in the open market. The Company provides funding to the ESOPs. The assets and liabilities of the ESOPs are recognized as assets and liabilities of the Company within these accounts. The ESOPs have waived their rights to dividends on shares held for future awards.

        At December 31, 2004 the ESOPs held 5,938,359 shares (at December 31, 2003, 4,118,835 shares) for potential future awards.

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Note 39 — Long-term performance plans

        During 2004, the Company operated two long-term performance plans: the Executive Directors' Incentive Plan (EDIP) for executive directors and the Long Term Performance Plan (LTPP) for senior employees. Executive directors participated in the LTPP prior to 2002 or to their appointment as an executive director, whichever was the later. Both plans are incentive schemes under which the Company may award shares to participants or fund the purchase of shares for participants if long-term targets are met. Awards were made in 2004 in respect of the 2001-2003 LTPP. Further details of the plans are given in Item 6—Directors, Senior Management and Employees — Compensation on page 117.

        The costs of potential future awards for both the EDIP and LTPP are accrued over the three-year performance periods of each plan. The amount charged in 2004 was $89 million (2003 $94 million and 2002 $51 million). The value of awards under the 2001-2003 LTPP made in 2004 was $42 million (2000-2002 LTPP made in 2003 $35 million and 1999-2001 LTPP made in 2002 $125 million). Employees are able to defer the date of their potential award beyond the end of the performance period. The amount charged in respect of the increase in deferred awards after the expiry of the relevant performance periods was $23 million (2003 $17 million and 2002 $19 million).

        Employee Share Ownership Plans (ESOPs) have been established to acquire BP shares to satisfy any awards made to participants under the EDIP and LTPP and then to hold them for the participants during the retention period of the plan. In order to hedge the cost of potential future awards and deferred awards the ESOPs may, from time to time over the performance period of the plans, purchase BP shares in the open market. The Company provides funding to the ESOPs. The assets and liabilities of the ESOPs are recognized as assets and liabilities of the Company within these accounts. The ESOPs have waived their rights to dividends on shares held for future awards.

        At December 31, 2004 the ESOPs held 5,938,359 shares (at December 31, 2003, 4,118,835 shares) for potential future awards.

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