Nearly 23,000 BT employees will share a payout of £1.1 billion after the organisation’s five-year sharesave plan matured on 1 August.
The employees, who are mostly contact centre agents and engineers, joined the scheme in 2009. Through the plan, they could save between £5 and £225 every month until July 2014.
At the time of launch, the telecommunications organisation had just issued two trading updates and its share price was at its lowest level, under 80 pence.
Using the closing share price on 31 July 2014, which was 388.5 pence, the average gain for employees who sell their shares immediately is £41,674.
This is based on the £124 average monthly saving in the plan. Monthly savings of £124 will have built up into a total fund of £7,762, enough to buy shares which (as of 31 July) had a market value of £49,436.
Around 7,000 BT Group employees saved the maximum of £225 a month. Based on 31 July’s closing price, the 23,090 shares these people can buy are worth £89,705, representing a gain of £75,620.
Less than 5% of shares are being sold immediately, a testament to the organisation’s extensive communications campaign around the sharesave scheme’s maturity.
Francis O’Mahony, head of employee share plans at BT Group, said: “It is such a big maturity and so many people are in it within BT that we needed to tackle the employee engagement and communications in a different way.”
The organisation began by surveying all participants in the sharesave scheme in October 2013 to find out what information they wanted, how and when.
“In response to that, one of the significant issues that people had was around the choices they were going to have and the tax consequences, particularly around capital gains tax,” added O’Mahony.
As a result of the survey responses, BT Group put together a series of updates, which it sent out for six months, beginning in December 2013.
The first update covered simple information about tax allowances and reliefs, and a flow chart of the choices employees could make online at maturity.
The second update went into more detail about the particular choices, with links to administrator Equiniti’s online employee share plans portal. Choices include selling the shares immediately, keeping some shares in the company-sponsored EasyShare, transfering shares to the pension scheme, transfering shares to an individual savings account (Isa) or transfering shares to a spouse.
Tax allowances and reliefs
The third update focused on tax allowances and reliefs. O’Mahony said: “We did that before the end of the last tax year. The reason for doing that was to remind people that they have a capital gains allowance and an Isa allowance for the tax year.
“We also majored on capital gains tax in the fourth one, including examples of what capital gains might look like.”
The fifth update introduced a personalised capital gains tax modeller for each participant.
“It modelled on the choices they could make as part of the online choices at maturity and worked out the chargeable gains for them based on modelling all of their choices,” added O’Mahony.
The final update concentrated on the September dividend, which was announced in May. “With the 1 August maturity date, we had a record date for the dividend of the 15 August,” said O’Mahony.
“We were telling people that if they were to exercise their option for the first maturity date and hold onto the shares on the 15 August, we spelled out in a personal way exactly what dividend they would receive.”
Online and face-to-face communications
BT Group sent out a maturity information pack to all participants in the sharesave scheme in June.
It also added a portal to the BT intranet, which included all the information from the six updates, a link to the capital gains tax modeller, the maturity booklet, a PowerPoint presentation on capital gains tax, frequently asked questions and links to financial advice options.
“We held a number of online e-chats, where we answered questions,” added O’Mahony. “We also held a question-time event in our auditorium at the beginning of July.
“People could come along to see us face to face and could also watch the presentation online. We had a panel that included myself, our pensions team, Equiniti and someone from Wealth at Work.”