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| 33.
Employee share schemes |
The
company has a share ownership scheme used for employee
share allocations (profit sharing), savings-related share
option schemes for its employees and those of participating
subsidiaries, further share option schemes for selected
group employees and an employee stock purchase plan for
employees in the United States. It also has several share
plans for executives.
Share option schemes
The major share option scheme, the BT Employee Sharesave
Scheme, is savings related and the share options are normally
exercisable on completion of a three- or five-year Save
As You Earn contract. A similar savings related scheme
exists for group employees based outside the UK. Under
the other share option schemes, share options are normally
exercisable between the third and tenth anniversaries
of the date of grant. Under a new option scheme introduced
in 2000, scheme participants are awarded options which
may vest after three years and which may be linked to
a performance target. Options outstanding under these
share option schemes at 31 March 2000 and 2001, together
with their exercise prices and dates, were as follows:
|
 |
|
|
|
|
|
|
|
|
| Savings-related
schemes |
|
|
|
|
|
| 2000 |
404p |
|
– |
4 |
|
| 2000 |
306p |
|
– |
37 |
|
| 2001 |
267p |
|
58 |
62 |
|
| 2001 |
583p |
|
3 |
4 |
|
| 2002 |
359p |
|
44 |
48 |
|
| 2002 |
949p |
|
3 |
4 |
|
| 2003 |
518p |
|
35 |
38 |
|
| 2003 |
818p |
|
5 |
– |
|
| 2004 |
844p |
|
23 |
29 |
|
| 2005 |
727p |
|
32 |
– |
|
|
| Total |
|
|
203 |
226 |
|
| Global share
options |
|
|
|
|
|
| 2001-2010 |
885p |
|
2 |
– |
|
| 2002-2011 |
885p |
|
3 |
– |
|
| 2003-2012 |
885p |
|
3 |
– |
|
|
| Total |
|
|
211 |
– |
|
| Other share
option schemes |
|
|
|
|
|
| 1993-2011 |
289p
to 1206p |
|
5 |
6 |
|
|
| Total options
outstanding |
|
|
216 |
232 |
|
|
|
| |
In
the period 1 April 2001 to 22 May 2001, no share options
were granted, and options over eleven million shares lapsed.
During the year ended 31 March 2001, BT granted options
over 49 million shares (2000 – 34 million, 1999
– 46 million) of which 41 million were under employee
sharesave schemes and eight million were under the BT
Global Share Option Plan. The weighted average fair value
of share options granted during the year ended 31 March
2001 has been estimated on the date of grant using the
Black-Scholes option pricing model. The following weighted
average assumptions were used in that model: an expected
life extending one month later than the first exercise
date; estimated annualised dividend yield of approximately
2% (2000 – 2%, 1999 – 3%); risk free interest
rates of approximately 7% (2000 – 6%, 1999 –
7%) on options exercisable three years after the date
of grant and 7% (2000 – 6%, 1999 – 7%) on
options exercisable five years after the date of grant;
and expected volatility of approximately 41% (2000 –
40%, 1999 – 30%).
The weighted average fair value of the share options granted
in the year ended 31 March 2001 was 329p (2000 –
413p, 1999 – 313p) for options exercisable three
years after the date of grant and 424p (2000 – 524p,
1999 – 309p) for options exercisable five years
after the date of grant. The total value of share options
granted by BT in the year ended 31 March 2001 was £168
million (2000 – £170 million, 1999 – £139
million). In accordance with UK accounting practices,
no compensation expense is recognised for the fair value
of options granted. See United
States Generally Accepted Accounting Principles –
IV Accounting for share options for the treatment
under US GAAP.
Options granted, exercised and lapsed under these share
option schemes during the years ended 31 March 1999, 2000
and 2001 and options exercisable at 31 March 1999, 2000
and 2001 were as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
| Outstanding, 31 March 1998 |
253 |
|
8 |
|
261 |
|
262p–596p |
|
316p |
|
| Granted |
45 |
|
1 |
|
46 |
|
518p–1053p |
|
536p |
|
| Exercised |
(46 |
) |
(3 |
) |
(49 |
) |
262p–583p |
|
321p |
|
| Lapsed |
(15 |
) |
– |
|
(15 |
) |
265p–773p |
|
328p |
|
|
| Outstanding, 31 March 1999 |
237 |
|
6 |
|
243 |
|
267p–1053p |
|
356p |
|
| Granted |
33 |
|
1 |
|
34 |
|
844p–1206p |
|
862p |
|
| Exercised |
(36 |
) |
(1 |
) |
(37 |
) |
267p–949p |
|
333p |
|
| Lapsed |
(8 |
) |
– |
|
(8 |
) |
267p–1043p |
|
366p |
|
|
| Outstanding, 31 March 2000 |
226 |
|
6 |
|
232 |
|
267p–1206p |
|
432p |
|
| Granted |
41 |
|
8 |
|
49 |
|
534p–885p |
|
751p |
|
| Exercised |
(46 |
) |
(1 |
) |
(47 |
) |
168p–1351p |
|
319p |
|
| Lapsed |
(17 |
) |
(1 |
) |
(18 |
) |
168p–1351p |
|
619p |
|
|
| Outstanding, 31 March
2001 |
204 |
|
12 |
|
216 |
|
168p–1351p |
|
564p |
|
|
| Exercisable, 31 March 1999 |
– |
|
4 |
|
4 |
|
289p–460p |
|
369p |
|
| Exercisable, 31 March 2000 |
– |
|
3 |
|
3 |
|
289p–460p |
|
368p |
|
| Exercisable, 31 March 2001 |
– |
|
3 |
|
3 |
|
289p–460p |
|
368p |
|
|
|
| |
BT
Incentive Share Plan and BT Retention Share Plan
The BT Incentive Share Plan (ISP) and the BT Retention
Share Plan (RSP) were introduced for employees of the
group in 2001. Under the plans, company shares are acquired
by an employee share ownership trust and are conditionally
awarded to participants. Under the ISP participants are
normally 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.
If the company has exceeded the pre-determined corporate
performance measure the participants may be awarded up
to double the shares conditionally awarded. Under the
RSP the length of retention period before awards vest
is flexible. Awards may vest in annual tranches. The shares
are transferred at the end of a specified period, only
if the individual is still employed by the group. The
corporate performance measure assesses the company’s
overall performance against those top 100 companies listed
on the London Stock Exchange, as rated by the Financial
Times (the FT-SE 100 index), at the beginning of the relevant
performance period.
BT Executive Share Plan, BT Performance
Share Plan and BT Deferred Bonus Plan
The BT Executive Share Plan (ESP) and the BT Performance
Share Plan (PSP) were introduced for employees of the
group in 1994 and 1995 respectively. Under the plans,
company shares are acquired by an employee share ownership
trust and are conditionally awarded to participants. Participants
are only entitled to these shares in full at the end of
a five-year period under the ESP and the end of a three-year
period, under the PSP if, at the end of the applicable
period, the company has met the relevant pre-determined
corporate performance measure. Awards of shares were granted
in each of the years from 1994 to 1999 under the ESP and
from 1995 to 1997 under the first performance cycle of
the PSP.
In 1994, 1995 and 1996 ESP participants could invest 50%
of their annual bonus in the ESP for the purchase of shares.
These invested shares were matched by the company.
Further awards of shares were granted in 1998 and 1999
under the second three-year performance cycle of the PSP.
The corporate performance measure assesses the company’s
overall performance against those top 100 companies listed
on the London Stock Exchange, as rated by the Financial
Times (the FT-SE 100 index), at the beginning of the relevant
performance period.
The second five-year performance cycle of the ESP ended
on 31 July 2000 (first: 31 July 1999) and on the basis
of the corporate measure, the company’s Total Shareholder
Return target relative to the other companies in the FT-SE
100, 100% (1999: 100%) of the shares vested on 1 August
2000 in 54 participants (1999: 25 participants) and 0.7
million shares (1999: 0.6 million shares) were transferred
to those participants.
The first three-year performance cycle of the PSP ended
on 31 July 1998 and on the basis of the corporate measure,
the company’s Total Shareholder Return target relative
to the other companies in the FT-SE 100, 90% of the shares
vested on 19 August 1998 in 745 participants and 5.0 million
shares were transferred to those participants.
The second and final three-year performance cycle of the
PSP ended on 31 March 2001 and on the basis of the corporate
measure, the company’s Total Shareholder Return
target relative to other companies in the FT-SE 100, 80%
of the shares will vest on 1 August 2001 in 1,560 participants
and 2.0 million shares will transfer to those participants.
The BT Deferred Bonus Plan (DBP) was established in 1998
and awards were granted to employees of the group in July
1998 and 1999. Under this plan, shares in the company
are acquired by an employee share ownership trust and
transferred to participants at the end of three years
if he or she has continued to be employed by the group
throughout that period.
At 31 March 2001, 19.1 million shares (2000 – 19.3
million) in the company were held in trust for employee
share schemes, of which 9.7 million shares were held for
the ISP, 0.4 million shares were held for the RSP, 5.4
million shares (2000 – 5.9 million) were held for
the ESP, 2.0 million shares (2000 – 2.2 million)
were held for the PSP and 1.6 million shares (2000 –
0.9 million) were held for the DBP. Dividends or dividend
equivalents earned on the shares during the conditional
periods are reinvested in company shares for the potential
benefit of the participants. Additional information relating
to the plans is as follows: |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Value of range of possible future
transfers: nil to |
25.2 |
2.2 |
24.7 |
10.2 |
|
6.7 |
69.0 |
|
| Provision for the costs of the
plans charged to the profit and loss account in
year |
– |
1.5 |
5.8 |
(1.7 |
) |
2.5 |
8.1 |
|
| Nominal value of shares held
in trust |
2.4 |
0.1 |
1.4 |
0.5 |
|
0.4 |
4.8 |
|
| Market value of shares held
in trust |
49.7 |
2.2 |
27.3 |
10.2 |
|
8.3 |
97.7 |
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Value of range of possible future
transfers: nil to |
– |
– |
66.9 |
25.3 |
10.4 |
102.6 |
|
| Provision for the costs of the
plans charged to the profit and loss account in
year |
– |
– |
6.4 |
14.4 |
7.7 |
28.5 |
|
| Nominal value of shares held
in trust |
– |
– |
1.5 |
0.6 |
0.2 |
2.3 |
|
| Market value of shares held
in trust |
– |
– |
69.4 |
25.4 |
10.4 |
105.2 |
|
|
|
| |
In
addition, 10.3 million shares were held at 31 March 2000
in trust for future awards under employee share schemes.
These shares had a nominal value of £2.6 million and a
market value of £122 million at 31 March 2000.
The values of possible future transfers of shares under
the plans were based on the company’s share price
at 31 March 2001 of 510p (2000 – 1,175p). The provisions
for the costs of the ISP, RSP, ESP and PSP were based
on best estimates of the company’s performance over
the plans’ conditional periods, relating to those
portions of the plan conditional periods from commencement
up to the financial year end.
BT Employee Stock Purchase
Plan
An employee stock purchase plan was established in 1998
for employees in the United States. Under this plan, employees
may purchase American Depositary Shares (ADSs) on a monthly
basis at a price equal to the lower of (i) 85% of the
average trading price of the ADSs on the New York Stock
Exchange on the date on which the purchase rights are
granted and, (ii) 85% of the average trading price of
the ADSs on the date of purchase. During the year ended
31 March 2001, the discounted price was between US$65.98
and US$154.88 (2000 – US$92.20 and US$170.21) per
ADS and 0.1 million shares (2000 – 0.8 million)
were issued under this plan. |
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