BT 2014 Annual Report Download - page 165

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162 Financial statements
21. Share-based payments continued
The following table summarises information relating to options outstanding and exercisable under Employee Saveshare plans at 31March 2014.
Normal dates of vesting and exercise (based on calendar years)
Exercise price per
share
Weighted
average
exercise
price
Number of
outstanding
options
millions
Weighted
average
remaining
contractual
life
2014 61p – 175p 64p 302 10 months
2015 104p – 189p 135p 64 22 months
2016 156p – 280p 207p 35 34 months
2017 168p –280p 169p 35 46 months
2018 249p 249p 22 58 months
Total 102p 458 19 months
GSOP and GLOP (Legacy Executive Plans)
During 2013/14 9m (2012/13 12m, 2011/12 2m) options were exercised, nil (2012/13 1m, 2011/12 2m) options expired and nil (2012/13
nil, 2011/12 1m) options were forfeited under former executive share option plans (GSOP and GLOP). Under these plans 1m (2012/13 11m,
2011/12 24m) options were outstanding at the end of the year and are exercisable up to 2014/15. The weighted average exercise price of the
outstanding options was 194p (2012/13 198p, 2011/12 198p). At 31 March 2014 outstanding options under GSOP and GLOP had a weighted
average remaining contractual life of four months.
Executive share plans
Movements in executive share plan awards during 2013/14 are shown below
Number of shares (millions)
ISP DBP Total
At 1 April 2013 98 22 120
Awards granted 19 3 22
Awards vested (40) (9) (49)
Awards lapsed (9) (3) (12)
Dividend shares reinvested 2 – 2
At 31 March 2014 70 13 83
Fair values
The following table summarises the fair values and key assumptions used for valuing grants made under the Employee Saveshare plans and ISP in
2013/14, 2012/13 and 2011/12.
2014 2013 2012
Year ended 31 March
Employee
Saveshare ISP
Employee
Saveshare ISP
Employee
Saveshare ISP
Weighted average fair value 61p 269p 43p 170p 44p 170p
Weighted average share price 310p 315p 209p 204p 198p 198p
Weighted average exercise price 257p n/a 176p n/a 161p n/a
Expected dividend yield 3.9% – 5.6% 5.6% 3.6% – 5.2% 5.1% 5.3% – 5.5% 5.3%
Risk free rates 0.7% – 1.5% 0.7% 0.3% – 0.8% 0.4% 1.1% – 2.0% 1.1%
Expected volatility 23.3% – 31.9% 32.0% 28.1% – 36.5% 33.6% 31.0% – 35.6% 31.2%
Employee Saveshare grants are valued using a Binomial options pricing model. Awards under the ISP are valued using Monte Carlo simulations. TSRs
are 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 reect the BT share price in the future. An expected life of
three months after vesting date is assumed for Employee Saveshare 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 eect at the time of the grant, for the expected life of the option or award.
The fair values for the DBP were determined using the market price of the shares at the date of grant. The weighted average share price for DBP
awards granted in 2013/14 was 315p (2012/13 203p, 2011/12 198p).