BT 2010 Annual Report Download - page 137

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FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
135BT 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 options outstanding under all share option plans at 31 March 2010, have weighted average remaining contractual lives as follows:
Employee Sharesave GSOP and GLOP
Weighted Number of Weighted Weighted Number of Weighted
average outstanding average average outstanding average
Range of exercise exercise options contractual Range of exercise exercise options contractual
prices price millions remaining life prices price millions remaining life
61p–68p 63p 465 48 months – – – –
100p – 199p 143p 57 32 months 150p-317p 198p 30 52 months
200p – 300p 242p 12 26 months 318p-650p 424p 8 8 months
Total 534 38
Executive share plans
Movements in executive share plans during 2010 are shown below:
Millions of shares
ISP DBP RSP Total
At 1 April 2009 75.2 15.5 1.5 92.2
Awards granted 50.0 4.5 0.3 54.8
Awards vested – (5.0) (0.6) (5.6)
Awards lapsed (28.4) (1.1) – (29.5)
Dividend shares reinvested 2.4 0.4 – 2.8
At 31 March 2010 99.2 14.3 1.2 114.7
At 31 March 2010 1.1m shares (2009: 1.3m) were held in trust and 113.6m shares (2009: 90.9m) were held in treasury for executive
share plans.
Fair value
The following table summarises the fair values and key assumptions used for grants made under the Employee Sharesave plans and ISP in
2010, 2009 and 2008.
2010 2009 2008
Employee Employee Employee
Year ended 31 March Sharesave ISP Sharesave ISP Sharesave ISP
Weighted average fair value 14p 106p 27p 47p 71p 182p
Weighted average share price 80p 131p 152p 199p 329p 306p
Weighted average exercise price 63p – 135p – 269p –
Expected dividend yield 5.7%–6.4% 6.5% 4.6%-6.4% 4.9% 5.5% 5.5%
Risk free rates 2.2%–2.8% 2.5% 2.1%-5.5% 5.2% 5.8% 5.8%
Expected volatility 26.9%–30.7% 38.5% 20.7%-28.4% 23.3% 22.0% 18.0%
Employee Sharesave grants, under the BT Group Employee Sharesave and the BT Group International Employee Sharesave option plans,
are valued using a Binomial option pricing model. Awards under the ISP are valued using Monte Carlo simulations. TSRs were generated for
BT and the comparator group at the end of the three year performance period, using each company’s volatility and dividend yield, as well
as the cross correlation between pairs of stocks.
Volatility has been determined by reference to BT’s historical volatility which is expected to reflect the BT share price in the future. An
expected life of three months after vesting date is assumed for Employee Sharesave options and for all other awards the expected life is
equal to the vesting period. The risk free interest rate is based on the UK gilt curve in effect at the time of the grant, for the expected life of
the option or award.
The fair values for the RSP and DBP were determined using the market price of the shares at the date of grant. The weighted average
share price for RSP awards granted in 2010 was 104p (2009: 151p, 2008: 310p). The weighted average share price for DBP awards
granted in 2010 was 131p (2009: 203p, 2008: 319p).