BT 2013 Annual Report Download - page 144

142 Financial statements
21. Share-based payments
The company has savings-related share option plans for its employees and those of participating subsidiaries, further share option plans for selected
employees and a stock purchase plan for employees in the US. It also has several share plans for executives. All share-based payment plans are
equity settled and details of these plans and an analysis of the total charge by type of award is set out below.
2013 2012 2011
Year ended 31 March £m £m £m
Employee Sharesave Plans 25 25 23
Executive Share Plans:
Incentive Share Plan (ISP) 27 43 37
Deferred Bonus Plan (DBP) 1085
Other plans 2 (1) 3
64 75 68
Employee Sharesave Plans
Under an HMRC approved savings-related share option plan employees save on a monthly basis, over a three or five-year period, towards the
purchase of shares at a fixed price determined when the option is granted. This price is usually set at a 20% discount to the market price for five-
year plans and 10% for three-year plans. The options must be exercised within six months of maturity of the savings contract, otherwise they lapse.
Similar plans operate for BT’s overseas employees.
Incentive Share Plan
Under the Incentive Share Plan, 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 measures and if the participants are still employed by the group. For ISP awards granted in
2012/13 and 2011/12: 40% of each award is linked to a total shareholder return target (TSR) for a comparator group of companies from the
beginning of the relevant performance period; 40% is linked to a three-year cumulative free cash flow measure, and 20% to growth in underlying
revenue excluding transit. For ISP awards made in 2010/11, 50% of each share award was linked to a TSR target for a comparator group of
companies from the beginning of the relevant performance period and 50% was linked to a three-year cumulative free cash flow measure.
Deferred Bonus Plan
Under the Deferred Bonus Plan, 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 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 Sharesave Plans
Movements in Employee Sharesave options are shown below.
Movement in the number of share options Weighted average exercise price
2013 2012 2011 2013 2012 2011
Year ended 31 March millions millions millions pence pence pence
Outstanding at 1 April 561 567 534 79 77 76
Granted 66 33 78 176 161 107
Forfeited (10) (17) (28) 120 97 94
Exercised (119) (12) (3) 69 132 163
Expired (8) (10) (14) 188 140 175
Outstanding at 31 March 490 561 567 91 79 77
Exercisable at 31 March – 1 1 – 128 111
The weighted average share price for all options exercised during 2012/13 was 221p (2011/12: 203p, 2010/11: 181p).