BT 2004 Annual Report Download - page 115

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34. Employee share schemes continued
Options outstanding under these share option schemes at 31 March 2004 and 2003, together with their exercise
prices and dates, were as follows:
Normal dates of exercise
2004
Option price
per share
2004
millions
2003
Option price
per share
2003
millions
BT Group Employee Sharesave schemes
2005 218p–255p 26 218p–255p 51
2006 154p–173p 30 ––
2007 218p–227p 54 218p–227p 113
2008 154p 123 ––
Total 233 164
BT Group Legacy Option Plan
a
1994-2009 ––277p–727p 2
2001-2011 318p–602p 16 318p–602p 17
Total 16 19
BT Group Global Share Option Plan
2004-2014 176p–199.5p 63 ––
2005-2012 163p–263p 61 163p–263p 66
2006-2014 176p–199.5p 54 ––
Total 178 66
Total outstanding options 427 249
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 113.
The weighted average fair value of share options granted during the year ended 31 March 2004 has been
estimated on the date of grant using a binomial 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% (2003 – 5%, 2002 – 5%); risk free interest rates
of approximately 4% (2003 – 5%, 2002 – 6%); and expected volatility of approximately 25% (2003 – 40%,
2002 – 34%).
The weighted average fair value of the share options granted in the year ended 31 March 2004 was 42p
(2003 – 55p, 2002 – 55p) for options exercisable three years after the date of grant and 51p
(2003 – 72p, 2002 – 55p) 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 41p. The weighted
average fair value of options granted under the Special Incentive Award has been estimated as 42p. The total
value of share options granted by BT in the year ended 31 March 2004 was £22 million (2003 – £41 million,
2002 – £88 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.
BT Annual Report and Form 20-F 2004114 Notes to the financial statements