BT 2008 Annual Report Download - page 132

BT Group plc Annual Report & Form 20-F 131
31. Share based payments continued
The following are legacy option plans which are no longer operated by the group.
BT Group Global Share Option Plan (GSOP)
The options granted in previous years were exercisable on the third anniversary of the date of grant, subject to continued
employment and meeting corporate performance targets. Options must be exercised within seven years of the vesting date.
BT Group Legacy Option Plan (GLOP)
On the demerger of 02, BT’s share option plans ceased to operate and were replaced by similar BT Group Employee Sharesave plans
and the BT Group Global Share Option Plan. The BT Group Legacy Option Plan was launched on 17 December 2001 following the
scheme of arrangement and demerger of 02 in November 2001, and is therefore outside the scope of IFRS 2. The options were
exercisable subject to continued employment and meeting corporate performance targets, on the third anniversary of the date of
grant. Options must be exercised within seven years of the vesting date.
Share Plans
Incentive Share Plan, Deferred Bonus Plan and Retention Share Plan
Under the BT Group Incentive Share Plan (ISP), participants are 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. The corporate performance measure is BT’s total shareholder return (TSR) measured against a comparator group of
companies from the European Telecom Sector at the beginning of the relevant performance period.
Under the BT Group Retention Share Plan (RSP), the length of retention period before awards vest is flexible. Awards may vest
annually in tranches. The shares are transferred at the end of a specified period, only if the employee is still employed by the group.
Under the BT Group Deferred Bonus Plan (DBP) awards are granted annually to selected employees of the group. Shares in the
company are transferred to participants at the end of three years if they continue to be employed by the group throughout that
period.
In accordance with the terms of the ISP, DBP and RSP, dividends or dividend equivalents earned on shares during the conditional
periods are reinvested in company shares for the potential benefit of the participants.
Employee Share Investment Plan (ESIP)
The ESIP is an HMRC approved plan that has been in operation since December 2001. It allows BT employees to buy shares with
contributions of up to £1,500 per tax year out gross of pay (directshare) and allows BT to provide free shares to UK employees
which are held in trust for at least three years (allshare). During 2008, 5.4 million directshare shares (2007: 5.3 million directshare
shares), were purchased by the Trustee of the ESIP on behalf of 19,603 (2007: 15,445) employees at a total cost of £15.8 million
(2007: £14.2 million). A further 1.4 million shares (2007: 1.0 million shares) were purchased by the Trustee by dividend
reinvestment on behalf of 22,136 (2007: 18,789) allshare and directshare employee participants.
During 2008, allshare was replaced by free BT Total Broadband Option 3 for all BT employees in the UK. Employees outside the
UK continue to receive awards of shares where practicable, otherwise they will receive awards equivalent to the value of free shares.
Share option plans
Activity relating to share options during 2008, 2007 and 2006 are shown below.
Employee Sharesave GSOP and GLOP
2008 2007 2006 2008 2007 2006
Movement in the number of share options: millions millions millions millions millions millions
.....................................................................................................................................................................................................................................
Outstanding at the beginning of the year 272 279 262 103 187 206
Granted 54 49 59 –––
Forfeited (15) (12) (20) (10) (9) (16)
Exercised (28) (42) (2) (14) (20) (3)
Expired or lapsed (2) (2) (20) (33) (55) –
Outstanding at the end of the year 281 272 279 46 103 187
Exercisable at the end of the year 22–46 48 57
Weighted average exercise price:
Outstanding at the beginning of the year 165p 166p 169p 227p 213p 213p
Granted 269p 185p 179p –––
Forfeited 208p 176p 173p 251p 222p 205p
Exercised 188p 199p 215p 198p 203p 199p
Expired or lapsed 179p 179p 216p 199p 189p –
Outstanding at the end of the year 180p 165p 166p 257p 227p 213p
Exercisable at the end of the year 158p 210p – 257p 261p 280p
Financial statements