BT 2011 Annual Report Download - page 114

111BT GROUP PLC ANNUAL REPORT & FORM 20-F 2011
FINANCIAL STATEMENTS
6. Share-based payments
The company has an employee share investment plan and savings-related share option plans for its employees and those of participating
subsidiaries, further share option plans for selected employees and an employee stock purchase plan for employees in the United States. It
also has several share plans for executives. All share-based payment plans are equity settled and details of these plans and an analysis of the
total charge by type of award is set out below.
2011 2010 2009
Year ended 31 March £m £m £m
Employee Sharesave Plan 23 25 107
Allshare International Plan 222
Employee Stock Purchase Plan 11–
Incentive Share Plan 37 29 18
Deferred Bonus Plan 51312
Retention Share Plan –12
68 71 141
Share options
Employee Sharesave Plan
There is an HMRC approved savings related share option plan, under which employees save on a monthly basis, over a three or five year
period, towards the purchase of shares at a fixed price determined when the option is granted. This price is usually set at a 20% discount to
the market price for five year plans and 10% for three year plans. The options must be exercised within six months of maturity of the savings
contract, otherwise they lapse. Similar plans operate for BT’s overseas employees.
Employee Stock Purchase Plan
The BT Group Employee Stock Purchase Plan (ESPP), for employees in the United States, enables participants to purchase American
Depositary Shares (ADSs) quarterly at a price which is 85% of the fair market price of an ADS at the end of each quarterly purchase period.
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 measures and if the participants are still employed by the group. In
2010 the corporate performance measures for the ISP was amended. For all ISP awards made, 50% of each share award is linked to a total
shareholder return target (TSR) for a 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 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 prior to 2010, 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 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.
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.
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. 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 (UK allshare). In 2008
UK allshare was replaced by free broadband for all BT employees in the UK. Employees outside the UK continued to receive awards of shares
where practicable (Allshare International), otherwise they received cash awards equivalent to the value of free shares.
During 2011 9.2m directshare shares (2010: 13.7m directshare shares), were purchased by the Trustee of the ESIP on behalf of 19,169
(2010: 19,730) employees at a total cost of £13.8m (2010: £15.0m). A further 1.8m shares (2010: 1.0m shares) were purchased by the
Trustee through dividend reinvestment on behalf of 19,392 (2010: 20,120) allshare and directshare employee participants. At 31 March
2011, 79.3m shares (2010: 79.2m shares) were held in trust on behalf of 64,643 participants (2010: 68,444).
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
OVERVIEWBUSINESS REVIEWFINANCIAL REVIEWREPORT OF THE DIRECTORSFINANCIAL STATEMENTSADDITIONAL INFORMATION