BT 2009 Annual Report Download - page 129

ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS BUSINESS AND FINANCIAL REVIEWS OVERVIEW
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS – NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
127BT GROUP PLC ANNUAL REPORT & FORM 20-F
FINANCIAL STATEMENTS
31. Share based payments continued
The following are legacy option plans which are no longer operated by the group.
BT Group Global Share Option Plan (GSOP)
The options granted in previous years were exercisable on the third anniversary of the date of grant, subject to continued employment and
meeting corporate performance targets. Options must be exercised within ten years of the grant date.
BT Group Legacy Option Plan (GLOP)
On the demerger of 02, BT’s share option plans ceased to operate and were replaced by similar BT Group Employee Sharesave plans and the
BT Group Global Share Option Plan. The BT Group Legacy Option Plan was launched on 17 December 2001 following the scheme of
arrangement and demerger of 02 in November 2001, and is therefore outside the scope of IFRS 2. The options were exercisable subject to
continued employment and meeting corporate performance targets. Options must be exercised within ten years of the original grant date.
Share Plans
Incentive Share Plan, Retention Share Plan and Deferred Bonus Plan
Under the BT Group Incentive Share Plan (ISP), participants are only entitled to these shares in full at the end of a three-year period if the
company has met the relevant pre-determined corporate performance measure and if the participants are still employed by the group. The
corporate performance measure is BT’s total shareholder return (TSR) measured against a comparator group of companies from the
European Telecom Sector at the beginning of the relevant performance period.
Under the BT Group Retention Share Plan (RSP), the length of retention period before awards vest is flexible. Awards may vest annually in
tranches. The shares are transferred at the end of a specified period, only if the employee is still employed by the group.
Under the BT Group Deferred Bonus Plan (DBP) awards are granted annually to selected employees of the group. Shares in the company
are transferred to participants at the end of three years if they continue to be employed by the group throughout that period.
In accordance with the terms of the ISP, RSP and DBP, dividends or dividend equivalents earned on shares during the conditional periods
are reinvested in company shares for the potential benefit of the participants.
Employee Share Investment Plan (ESIP)
The ESIP is an HMRC approved plan that has been in operation since December 2001. It allows BT employees to buy shares with
contributions of up to £1,500 per tax year out of gross pay (directshare) and allows BT to provide free shares to UK employees which are
held in trust for at least three years (allshare). During 2009, 10.7m directshare shares (2008: 5.4m directshare shares), were purchased by
the Trustee of the ESIP on behalf of 20,384 (2008: 19,603) employees at a total cost of £16.4m (2008: £15.8m). A further 3.3m shares
(2008: 1.4m shares) were purchased by the Trustee by dividend reinvestment on behalf of 21,782 (2008: 22,136) allshare and directshare
employee participants. At 31 March 2009, 75.9m shares (2008: 72.2m shares) were held in trust on behalf of 76,678 participants (2008:
81,560).
In 2008, allshare was replaced by free BT Total Broadband Option 3 for all BT employees in the UK. Employees outside the UK continue to
receive awards of shares where practicable, otherwise they will receive awards equivalent to the value of free shares.
Share option plans
Activity relating to share options during 2009, 2008 and 2007 is shown below.
Employee Sharesave GSOP and GLOP
2009 2008 2007 2009 2008 2007
Movement in the number of share options: millions millions millions millions millions millions
Outstanding at the beginning of the year 281 272 279 46 103 187
Granted 3395449–––
Forfeited (390) (15) (12) (3) (10) (9)
Exercised (80) (28) (42) (1) (14) (20)
Expired (14) (2) (2) – (33) (55)
Outstanding at the end of the year 136 281 272 42 46 103
Exercisable at the end of the year 1 2 2 42 46 48
Weighted average exercise price:
Outstanding at the beginning of the year 180p 165p 166p 257p 227p 213p
Granted 135p 269p 185p – – –
Forfeited 153p 208p 176p 199p 251p 222p
Exercised 155p 188p 199p 196p 198p 203p
Expired 178p 179p 179p – 199p 189p
Outstanding at the end of the year 160p 180p 165p 256p 257p 227p
Exercisable at the end of the year 195p 158p 210p 256p 257p 261p