BT 2010 Annual Report Download - page 135

FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
133BT GROUP PLC ANNUAL REPORT & FORM 20-F
ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS REVIEW OF THE YEAR OVERVIEW
30. 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 ten years of the grant 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 GSOP. The BT GLOP was launched on 17 December 2001 following the scheme of arrangement and demerger of 02in November
2001, and is therefore outside the scope of IFRS 2. The options were exercisable subject to continued employment and meeting corporate
performance targets. Options must be exercised within 10 years of the original grant date.
Share plans
Employee Share Investment Plan (ESIP)
The ESIP is an HMRC approved plan. It allows BT employees to buy shares with contributions of up to £1,500 per tax year out of gross pay
(directshare) and allows BT to provide free shares to UK employees which are held in trust for at least three years (allshare). In 2008, allshare
was replaced by free broadband 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.
During 2010, 13.7m directshare shares (2009: 10.7m directshare shares), were purchased by the Trustee of the ESIP on behalf of
19,730 (2009: 20,384) employees at a total cost of £15.0m (2009: £16.4m). A further 1.0m shares (2009: 3.3m shares) were purchased
by the Trustee through dividend reinvestment on behalf of 20,120 (2009: 21,782) allshare and directshare employee participants. At
31 March 2010 79.2m shares (2009: 75.9m shares) were held in trust on behalf of 68,444 participants (2009: 76,678).
Incentive Share Plan, Retention Share Plan and Deferred Bonus 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. In 2010,
the corporate performance measure for the ISP was amended. For all ISP awards made in 2010, 50% of each share award is linked to a total
shareholder return target (TSR) for a revised comparator group of companies from the beginning of the relevant performance period and the
remaining 50% is linked to a three year cumulative free cash flow measure. The revised comparator group contains European
telecommunications companies and companies which are either similar in size or market capitalisation and/or have a similar business mix and
spread to BT. For ISP awards in prior periods, a single corporate performance measure was used, being BT’s TSR measured against a comparator
group of companies from the European telecommunications sector.
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, RSP and DBP, dividends or dividend equivalents earned on shares during the conditional periods
are reinvested in company shares for the potential benefit of the participants.