BT 2003 Annual Report Download - page 119

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34. Employee share schemes continued
Options outstanding under these share option schemes at 31 March 2003 and 2002, together with their exercise
prices and dates, were as follows:
Normal dates of exercise
2003
Option price
per share
2003
millions
2002
Option price
per share
2002
millions
BT Employee Sharesave schemes
British Telecommunications plc shares
2002-2005 – –322p–852p 92
BT Group Employee Sharesave schemes
BT Group plc shares
2005 218p–255p 51 218p 56
2007 218p–227p 113 218p 104
Total 164 160
BT Group Legacy Option Plan
a
BT Group plc shares
1993-2009 277p–727p 2231p–727p 4
2001-2011 318p–602p 14 602p 15
2004-2011 318p–602p 3318p 3
Total 19 22
BT Group Global Share Option Plan
BT Group plc shares
2005-2012 163p–263p 66 263p 2
Total outstanding options 249 276
a
The option prices of shares under the BT Group Legacy Option Plan were adjusted at the time of the demerger as detailed on page 117.
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.
The weighted average fair value of share options granted during the year ended 31 March 2003 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 yield of approximately 5% (2002 – 5%, 2001 – 2%); risk free interest rates
of approximately 5% (2002 – 6%, 2001 – 7%); and expected volatility of approximately 40% (2002 – 34%,
2001 – 41%).
The weighted average fair value of the share options granted in the year ended 31 March 2003 was 55p
(2002 – 55p, 2001 – 329p) for options exercisable three years after the date of grant and 72p
(2002 – 55p, 2001 – 424p) for options exercisable five years after the date of grant. The weighted average fair
value of options granted under the BT Group Global Share Option Plan has been estimated as 24p. The total
value of share options granted by BT in the year ended 31 March 2003 was £41 million (2002 – £88 million,
2001 – £168 million).
In accordance with UK accounting practices, no compensation expense is recognised for the fair value
of options granted where the exercise price equals the market price at date of grant or options granted under
approved Sharesave schemes. See United States Generally Accepted Accounting Principles – IV Accounting for
share options for the treatment under US GAAP.
Notes to the financial statements
118 BT Annual Report and Form 20-F 2003