BT 2002 Annual Report Download - page 119

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34. Employee share schemes continued
On the demerger, BT's share option plans ceased to operate and were replaced by similar BT Group Employee Sharesave
schemes and the BT Group Global Share Option Plan.
During the year ended 31 March 2002, BT Group granted options over 186 million shares (2001 ± 49 million,
2000 ± 34 million) of which 160 million were under employee sharesave schemes and 24 million were under the BT Group
Legacy Option Plan. Options over 2 million shares were granted under the BT Group Global Share Option Plan in February
2002.
Options outstanding under the BT Group Employee Sharesave schemes and the BT Group Global Share Option Plan
as at 31 March 2002 were as follows:
Normal dates of exercise
Option price
per share
Number of
ordinary
shares
millions
BT Group Employee Sharesave schemes
2005 218p 56
2007 218p 104
Total 160
BT Group Global Share Option Plan
2005±2012 263p 2
Total 162
The weighted average fair value of share options granted during the year ended 31 March 2002 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 ®rst exercise date; estimated annualised dividend yield of
approximately 5% (2001 ± 2%, 2000 ± 2%); risk free interest rates of approximately 6% (2001 ± 7%, 2000 ± 6%); and
expected volatility of approximately 34% (2001 ± 41%, 2000 ± 40%).
The weighted average fair value of the share options granted in the year ended 31 March 2002 was 55p
(2001 ± 329p, 2000 ± 413p) for options exercisable three years after the date of grant and 55p
(2001 ± 424p, 2000 ± 524p) for options exercisable ®ve years after the date of grant. The total value of share options
granted by BT in the year ended 31 March 2002 was £88 million (2001 ± £168 million, 2000 ± £170 million).
In accordance with UK accounting practices, no compensation expense is recognised for the fair value of options
granted. See United States Generally Accepted Accounting Principles ± IV Accounting for share options for the treatment
under US GAAP.
BT Group Employee Share Investment Plan
From December 2001 the new BT Group Share Investment Plan (ESIP) was in operation. This plan, which has been
approved by the Inland Revenue, gives UK employees an opportunity to purchase shares monthly out of pre-tax salary up
to a maximum of £125 per month. During the year ended 31 March 2002, 667,000 shares were purchased by the trustee
of the ESIP on behalf of employees at a total cost of £1.8 million.
Notes to the financial statements
118 BT Group Annual Report and Form 20-F 2002