BT 2005 Annual Report Download - page 105

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31. Employee share plans continued
Incentive Share Plan and Retention Share Plan
The BT Incentive Share Plan (ISP) and the BT Retention Share Plan (RSP) were introduced for employees of the group in
2000. Under the plans, company shares are acquired by an employee share ownership trust and are conditionally
awarded to participants. Under the ISP participants are normally only entitled to these shares in full at the end of a
three-year period if the company has met the relevant pre-determined corporate performance measure and if the
participants are still employed by the group. If the company has exceeded the pre-determined corporate performance
measure the participants may be awarded up to double the shares conditionally awarded. The corporate performance
measure is BT’s total shareholder return (TSR) measured against a group of companies from the European Telecom
Sector at the beginning of the relevant performance period. The ISP was operated in the 2005 financial year with 1,406
participants receiving awards over 12,654,013 shares. The ISP was not operated in the 2004 financial year. Under the
RSP the length of retention period before awards vest is flexible. Awards may vest in annual tranches. The shares are
transferred at the end of a specified period, only if the individual is still employed by the group. During the 2005
financial year 1,340,256 (2004 – 720,472) shares vested in 11 (2004 – 7) participants in the RSP.
Deferred Bonus Plan
The BT Deferred Bonus Plan (DBP) was established in 1998 and awards are granted annually to employees of the
group. 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 2 August 2004, 1,280,934 shares (1 August 2003 – 653,899) were transferred to 219 participants (1 August 2003
– 225) at the end of the three-year deferred period.
At 31 March 2005, 27.8 million shares (2004 – 30.5 million shares) in the company were held in trust for employee share
plans, of which 12.7 million shares (2004 – no shares) were held for the ISP, 2.8 million shares (2004 – 3.0 million shares)
were held for the RSP and 7.9 million shares (2004 – 6.5 million 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 benefit of
the participants.
Additional information relating to the plans is as follows:
Year ended 31 March 2005
ISP
£m
RSP
£m
DBP
£m
Total
£m
Value of range of possible future transfers: nil to 26.1 5.7 16.1 47.9
Provision for the costs of the plans charged to the profit
and loss account in year 3.2 2.1 5.3 10.6
Nominal value of shares held in trust 0.6 0.1 0.4 1.1
Market value of shares held in trust 26.1 5.7 16.1 47.9
Year ended 31 March 2004
ISP
£m
RSP
£m
DBP
£m
Total
£m
Value of range of possible future transfers: nil to – 5.3 11.4 16.7
Provision for the costs of the plans charged to the profit
and loss account in year – 9.3 8.2 17.5
Nominal value of shares held in trust – 0.2 0.3 0.5
Market value of shares held in trust – 5.3 11.4 16.7
Of the total BT Group plc shares held, 4.5 million shares were held at 31 March 2005 in trust for future awards under
employee share plans. These shares had a nominal value of £0.2 million and a market value of £9.3 million at 31 March
2005.
The values of possible future transfers of shares under the plans were based on the BT Group plc share price at
31 March 2005 of 205.5p (2004 – 177p). The provisions for the costs of the ISP and RSP were based on best estimates
of the company’s performance over the plans’ conditional periods, relating to those portions of the plan conditional
periods from commencement up to the financial year end.
104 BT Group plc Annual Report and Form 20-F 2005 Notes to the financial statements