BT 1998 Annual Report Download - page 71

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N O T E S T O T H E F I N A N C I A L S TAT E M E N T
28. Employee share schemes
The company has a share ownership scheme used for employee share allocations (profit sharing), savings-related share option
schemes for its employees and those of participating subsidiaries and further share option schemes for selected group
employees. It also has a performance share plan and a long-term remuneration plan.
Share option schemes
The major share option scheme, the BT Employee Sharesave Scheme, is savings related and the share options are normally
exercisable on completion of a three or five-year Save As You Earn contract. A similar savings-related scheme exists for group
employees overseas. Under the other share option schemes, share options are normally exercisable between the third and
tenth anniversaries of the date of grant. Options outstanding under these share option schemes at 31 March, together with their
exercise prices and dates, were as follows:
Number of
ordinary shares
))))!!!!!!0051111!
Normal
dates of Option price 1998 1997
exercise per share millions millions
Savings-related schemes:
1997 265p –46
1998 320p 45 47
1999 341p 27 29
1999 300p 89
2000 404p 5–
2000 306p 47 48
2001 267p 68 70
2002 359p 53 –
During the year ended 31 March 1998, BT granted 60 million options (1997 – 79 million, 1996 – nil) under the employee
sharesave schemes. The weighted average fair value of share options granted during the year ended 31 March 1998 has been
estimated on the date of grant using the Black-Scholes option pricing model. The following weighted average assumptions were
used in that model: an expected life extending one month later than the first exercise date; estimated annualised dividend growth
rates of approximately 5%; risk free interest rates of 7% on options exercisable three years after the date of grant and 8% on
options exercisable five years after the date of grant; and expected volatility of approximately 18%.
The weighted average fair value of the share options granted in the year ended 31 March 1998 was 80p (1997 – 85p) for options
exercisable three years after the date of grant and 120p (1997 – 107p) for options exercisable five years after the date of grant.
The total value of share options granted by BT in the year ended 31 March 1998 was £70m (1997 – £83m) . In accordance with
UK accounting practices, no compensation expense is recognised for the fair value of options granted. See note 30 for the
treatment under US GAAP.
Number of
ordinary shares
))))!!!!!!0051111!
Normal
dates of Option price 1998 1997
exercise per share millions millions
Other share option schemes:
1992–1999 281p –1
1993–2000 289p 13
1995–2002 333p 34
1996–2003 430p 22
1997–2004 375p 24
Total options outstanding 261 263