BT 2016 Annual Report Download - page 202
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208 BT Group plc
Annual Report 2016
22. Share-based payments continued
Executive share plans
Movements in executive share plan awards during 2015/16 are shown below:
Number of shares (millions)
ISP DBP Total
At 1 April 2015 57 11 68
Awards granted 14 216
Awards vested (17) (5) (22)
Awards lapsed (12) –(12)
Dividend shares reinvested 1 – 1
At 31 March 2016 43 851
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 2015/16, 2014/15 and 2013/14.
2016 2015 2014
Year ended 31 March
Employee
Saveshare ISP
Employee
Saveshare ISP
Employee
Saveshare ISP
Weighted average fair value 81p 364p82p 309p 61p 269p
Weighted average share price 454p 451p 387p 393p 310p 315p
Weighted average exercise price 385p n/a 326p n/a 257p n/a
Expected dividend yield 3.2% – 3.7% n/a 3.5% – 3.8% n/a 3.9% – 5.6% n/a
Risk free rates 0.7% – 1.6% 0.7% 1.2% – 2.0% 1.2% 0.7% – 1.5% 0.7%
Expected volatility 19.7% – 22.7% 22.0% 22.2% – 24.9% 24.3% 23.3% – 31.9% 32.0%
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 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 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 effect 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 grant date. The weighted average share price for
DBP awards granted in 2015/16 was 451p (2014/15: 393p, 2013/14: 315p).