This excerpt taken from the BP 20-F filed Jun 30, 2005.
The Plan has three Elements which comprise the tools available to the Committee to construct Executive Directors' long-term incentive arrangements:
The Share Element This Element permits Performance Share Awards to be granted to Executive Directors, which may result in Shares vesting (without payment by the Executive Directors) to the extent that a demanding performance condition imposed by the Committee is met. In exceptional circumstances, Shares may be awarded which are subject to a requirement of continued service over a specified period, rather than a corporate performance condition;
The Share Option Element This Element permits Options to be granted to Executive Directors at an Option Exercise Price no lower than the Market Value of a Share. All Options will be subject to a demanding performance condition; and
The Cash Incentive Element This Element (which shall only be capable of grant under the Schedule to the Plan) enables the Committee to introduce long-term cash-based incentives into the remuneration package. The Committee only intends to use this Element in special circumstances.
In operating the Plan, the Committee shall at all times have regard to the following key objectives and principles (as amended in connection with renewal of the Plan at the Annual General Meeting in 2005):