BT 2007 Annual Report Download - page 126

31. SHARE BASED PAYMENTS continued
The number of shares issuable under the ISP, DBP and RSP were as follows:
ISP DBP RSP Total
Number of shares (millions)
At 1 April 2004 – 5.2 3.0 8.2
Awards granted 12.6 2.9 1.6 17.1
Awards vested – (0.6) (2.0) (2.6)
Awards lapsed (0.3) – – (0.3)
Dividend shares reinvested 0.6 0.4 0.1 1.1
At 31 March 2005 12.9 7.9 2.7 23.5
Awards granted 23.2 2.3 1.8 27.3
Awards vested – (2.0) (1.1) (3.1)
Awards lapsed (1.0) (0.2) – (1.2)
Dividend shares reinvested 1.7 0.4 0.2 2.3
At 31 March 2006 36.8 8.4 3.6 48.8
Awards granted 24.9 5.8 0.8 31.5
Awards vested – (2.9) (1.2) (4.1)
Awards lapsed (5.3) (0.6) (0.1) (6.0)
Dividend shares reinvested 2.6 0.5 0.1 3.2
At 31 March 2007 59.0 11.2 3.2 73.4
In accordance with the terms of the ISP, DBP and RSP plans, dividends or dividend equivalents earned on shares during the
conditional periods are reinvested in company shares for the potential benefit of the participants.
At 31 March 2007, 15.6 million shares (2006: 21.4 million, 2005: 23.3 million) were held in trust and 57.8 million shares (2006:
27.4 million, 2005: 0.2 million) were held in treasury for employee share plans and other share based payment plans.
Employee Share Investment Plan
The BT Group Employee Share Investment Plan (ESIP) has been in operation since December 2001. The ESIP, which has been
approved by HM Revenue and Customs, comprises ‘directshare’ and ‘allshare’. Under directshare, UK employees are given an
opportunity to purchase shares (partnership shares) out of pre-tax salary up to a maximum value of £1,500 per year. During the
2007 financial year, 6.3 million shares (2006: 6.4 million shares, 2005: 6.1 million shares), including 1.0 million shares (2006:
0.8 million shares, 2005: 0.2 million shares) purchased by dividend reinvestment, were purchased by the Trustee of the ESIP on
behalf of 15,445 (2006: 14,443, 2005: 13,017) employees at a total cost of £14.3 million (2006: £13.7 million, 2005: £11.7
million). Allshare, the free shares element of the ESIP allows BT to provide free shares to UK employees which are held in trust for
at least three years. Employees outside the UK receive the same awards of shares where practicable, otherwise they will receive
awards equivalent to the value of the free shares. In 2007 1% (2006: 1%, 2005: 0.5%) of pre-tax profits, amounting to £25
million, was allocated to Allshare (2006: £22 million, 2005: £11 million). Up to 2% of pre-tax profits would have been available
subject to meeting two corporate performance targets; one of these to maintain earnings per share at the same level as in the 2006
financial year, and the other to have five percent more customers very or extremely satisfied with BT (provided the percentage of
customers who are dissatisfied did not increase compared with the 2006 financial year). The earnings per share target was met but
not the one for customer satisfaction. From the 2008 financial year onwards, Allshare will be replaced by free BT Total Broadband
Option 3 for all BT employees in the UK.
Employee Stock Purchase Plan
The BT Group Employee Stock Purchase Plan (ESPP), for employees in the US, enables participants to purchase American Depositary
Shares (ADSs) quarterly at a price (the Initial Base Option Price) which is 85% of the fair market price of an ADS at the start of the
Initial Enrolment Period of, in the case of employees who enrol in the ESPP after the Initial Enrolment Period, 85% of the fair
market price of an ADS on the last business day of the calendar quarter immediately following enrolment. From 15 May 2006 to
15 May 2007 2,070,190 shares (207,019 ADSs) have been transferred to participants out of treasury under the ESPP (from 15 May
2005 to 15 May 2006 1,750,560 shares (175,056 ADSs); from 15 May 2004 to 15 May 2005 934,782 shares (93,478 ADS’s)). The
fourth offer, with an Initial Base Option Price of US$32.52 ended in December 2006. A fifth offer was launched in December 2006
with an Initial Base Option Price of US$46.00 and will expire in December 2008.
Openreach
In the Undertakings given to Ofcom on 22 September 2005, BT agreed that the incentive elements of the remuneration of
employees within Openreach should be linked to Openreach performance rather than BT targets or share price. However Openreach
employees are allowed to participate in the BT HMRC approved all-employee share plans on the same terms as other BT employees.
BT Group plc Annual Report & Form 20-F 125
Financial statements