BT 2005 Annual Report Download - page 104

31. Employee share plans continued
In the year ended 31 March 2005, options over 31 million shares were granted under the BT Group Global Share
Option Plan. The options will be exercisable subject to continued employment and meeting corporate performance
targets, on the third anniversary of the date of grant.
Options outstanding under these share option plans at 31 March 2005 and 2004, together with their exercise prices
and dates, were as follows:
Normal dates of exercise
2005
Option price
per share
2005
millions
2004
Option price
per share
2004
millions
BT Group Employee Sharesave plans
2005 218p–255p 20 218p–255p 26
2006 154p–173p 22 154p–173p 30
2007 146p–227p 57 218p–227p 54
2008 154p 92 154p 123
2009 146p 71 ––
Total 262 233
BT Group Legacy Option Plan
a
2001-2011 318p–602p 15 318p–602p 16
Total 15 16
BT Group Global Share Option Plan
2004-2014 176p–199.5p 59 176p–199.5p 63
2005-2012 163p–263p 51 163p–263p 61
2006-2014 176p–199.5p 51 176p–199.5p 54
2007-2015 179p–215p 30 ––
Total 191 178
Total outstanding options 468 427
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 102.
The weighted average fair value of share options granted during the year ended 31 March 2005 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% (2004 – 5%, 2003 – 5%); risk free interest rates of approximately 5% (2004 – 4%, 2003 – 5%); and
expected volatility of approximately 25% (2004 – 25%, 2003 – 40%).
The weighted average fair value of the share options granted in the year ended 31 March 2005 was 41p
(2004 – 42p, 2003 – 55p) for Sharesave options exercisable three years after the date of grant and 52p
(2004 – 51p, 2003 – 72p) for Sharesave options exercisable five years after the date of grant. The BT Group Global
Share Option Plan and the BT Group Incentive Share Plan (an executive share plan) were valued using Monte Carlo
simulations. The weighted average fair value of options granted under the BT Group Global Share Option Plan has
been estimated as 36p. The weighted average fair value of awards of shares granted under the Incentive Share Plan has
been estimated as 98p. The total value of share options granted by BT in the year ended 31 March 2005 was
£77 million (2004 – £136 million, 2003 – £41 million).
In accordance with UK accounting practices, no compensation expense is recognised for options granted where the
exercise price equals the market price at date of grant, or options granted under approved Sharesave plans. See United
States Generally Accepted Accounting Principles – IV Accounting for share options for the treatment under US GAAP.
Options granted, exercised and lapsed under these share option plans during the years ended 31 March 2003, 2004
and 2005 and options exercisable at 31 March 2003, 2004 and 2005 were as follows:
Savings
related
schemes
millions
Executive
option
plans
millions
Total
millions
Exercise
price
range
Weighted
average
exercise
price
Outstanding, 31 March 2003 164 85 249 163p–727p 231p
Granted 165 119 284 154p–199.5p 175p
Lapsed (96) (10) (106) 154p–716p 220p
Outstanding, 31 March 2004 233 194 427 154p–727p 196p
Granted 91 31 122 146p–215p 160p
Lapsed (62) (19) (81) 146p–602p 189p
Outstanding, 31 March 2005 262 206 468 146p–602p 188p
Exercisable, 31 March 2003 – 11 11 255p–727p 491p
Exercisable, 31 March 2004 – 13 13 255p–727p 476p
Exercisable, 31 March 2005 16 34 50 199.5p–602p 288p
Notes to the financial statements BT Group plc Annual Report and Form 20-F 2005 103