BT 2002 Annual Report Download - page 121

34. Employee share schemes continued
In 1994, 1995 and 1996 ESP participants could invest 50% of their annual bonus in the ESP for the purchase of
shares. These invested shares were matched by the company.
Further awards of shares were granted in 1998 and 1999 under the second three-year performance cycle of the PSP. The
corporate performance measure assesses the company's overall performance against those top 100 companies listed on
the London Stock Exchange, as rated by the Financial Times (the FTSE 100 index), at the beginning of the relevant
performance period.
The third ®ve-year performance cycle of the ESP ended on 31 July 2001 and on the basis of the corporate measure,
the company's Total Shareholder Return (TSR) target relative to the other companies in the FTSE 100, 85% (2001: 100%)
of the shares vested on 1 August 2001 in 62 participants (2000: 54 participants) and 1.2 million shares (2000: 0.7 million
shares) were transferred to those participants.
The ®rst three-year performance cycle of the PSP ended on 31 July 1998 and on the basis of the corporate measure,
the company's Total Shareholder Return target relative to the other companies in the FTSE 100, 90% of the shares vested
on 19 August 1998 in 745 participants and 5.0 million shares were transferred to those participants.
The second and ®nal three-year performance cycle of the PSP ended on 31 March 2001 and on the basis of the
corporate measure, the company's TSR target relative to other companies in the FTSE 100, 80% of the shares vested on
1 August 2001 to 1,436 participants and 1.6 million shares were transferred to those participants.
The BT Deferred Bonus Plan (DBP) was established in 1998 and awards were granted to employees of the group in
July 1998, 1999, 2000 and June 2001. Under this plan, shares in the company are acquired by an employee share
ownership trust and transferred to participants at the end of three years if he or she has continued to be employed by the
group throughout that period. On 1 August 2001, 303,326 shares were transferred to 154 participants at the end of the
three-year deferred period.
At 31 March 2002, 24.6 million BT Group plc shares (2001 ± 19.1 million British Telecommunications plc shares) in the
company were held in trust for employee share schemes, of which 16.5 million BT Group plc shares (2001 ± 9.7 million British
Telecommunications plc shares) were held for the ISP, 1.1 million BT Group plc shares (2001 ± 0.4 million British
Telecommunications plc shares) were held for the RSP, 4.4 million BT Group plc shares (2001 ± 5.4 million British
Telecommunications plc shares) were held for the ESP, no shares (2001 ± 2.0 million British Telecommunications plc shares)
were held for the PSP and 2.7 million BT Group plc shares (2001 ± 1.6 million British Telecommunications plc shares) were held
for the DBP. Dividends or dividend equivalents earned on the shares during the conditional periods are reinvested in company
shares for the potential bene®t of the participants. The Trustees sold suf®cient rights during the rights issue to enable it to take
up the remainder. The additional shares were added to the contingent awards of participants.
All awards of British Telecommunications plc shares were, following the scheme of arrangement and demerger,
converted into awards of shares in the employer's holding company (BT Group plc or mmO2 plc). The value of the awards
was determined by combining the prices of BT Group and mmO2 shares over the 20 dealing days following the demerger
on 19 November 2001. This gave a factor for the adjustment of awards of British Telecommunications plc shares into
BT Group shares of 1.3198. For awards which were subject to TSR, the TSR of British Telecommunications plc was
measured up to 20 days following the demerger and, after that date, the TSR of BT Group will be measured for the
remainder of the performance period.
For awards under the ESP which were granted in 1997, the TSR of BT was measured at the date 20 days following the
demerger and the awards of shares will vest on the basis of the TSR position on 17 December 2001. BT's TSR was at 57th
position against the FTSE 100 on that date and, as a result, 32.5% of the shares will vest on 1 August 2002.
Following the demerger, the BT plans were replaced by the BT Group Incentive Share Plan, the BT Group Deferred
Bonus Plan and the BT Group Retention Share Plan.
Additional information relating to the plans is as follows:
Year ended 31 March 2002
ISP
£m
RSP
£m
ESP
£m
DBP
£m
Total
£m
Value of range of possible future transfers: nil to 46.0 3.0 12.3 7.5 68.8
Provision for the costs of the plans charged (credited) to the pro®t
and loss account in year ± 5.4 (9.2) 2.1 (1.7)
Nominal value of shares held in trust 0.8 0.1 0.2 0.1 1.2
Market value of shares held in trust 46.0 3.0 12.3 7.5 68.8
Year ended 31 March 2001
PSP
£m
ISP
£m
RSP
£m
ESP
£m
DBP
£m
Total
£m
Value of range of possible future transfers: nil to 10.2 25.2 2.2 24.7 6.7 69.0
Provision for the costs of the plans charged (credited) to the pro®t
and loss account in year (1.7) ± 1.5 5.8 2.5 8.1
Nominal value of shares held in trust 0.5 2.4 0.1 1.4 0.4 4.8
Market value of shares held in trust 10.2 49.7 2.2 27.3 8.3 97.7
Notes to the financial statements
120 BT Group Annual Report and Form 20-F 2002