BT 1997 Annual Report Download - page 24

24
Corporate governance
The directors consider that throughout the year BT has
fully complied with the Code of Best Practice published by
the Committee on the Financial Aspects of Corporate
Governance (the “Cadbury Committee”) and has complied
throughout the year with Section A of the best practice
provisions of the Stock Exchange Listing Rules
introduced following the publication of Directors’
Remuneration – Report of a Study Group chaired by Sir
Richard Greenbury (the “Greenbury Report”).
The Board
The Board meets regularly to consider matters specifically
reserved for its attention. It sets the strategic direction of
the group and monitors overall performance.
The majority of the directors are non-executive and,
between them, have a wide range of experience at a senior
level in international, legal, marketing, government and
diplomatic affairs. Six of the nine non-executive directors
are independent of the management of BT, either being
free from any business or other relationships which could
materially interfere with the exercise of their judgement
or not previously involved in the management of BT.
Non-executive directors are normally appointed initially
for three years. Towards the end of that period the Board
will consider whether to continue the appointment, which
will then become terminable on twelve months’ notice
from either BT or the director. Appointments will be
reviewed again by the Board before the end of the sixth
year. Normally, appointments will be for a maximum of
ten years.
The non-executive directors provide a strong independent
element on the Board, with Sir Colin Marshall, Deputy
Chairman, as senior member. However, the Board
operates as a single team.
The executive directors have service agreements which
are reviewed by the Board Committee on Executive
Remuneration. Information about the periods of these
contracts is in the report of the Committee on page 29.
The Board has agreed and established a procedure
for directors, in furtherance of their duties, to take
independent professional advice, if necessary, at the
company’s expense. In addition, all directors have access
to the advice and services of the company secretary, the
removal of whom would be a matter for the whole Board.
Board committees
The Executive Committee is chaired by the Chief
Executive, Sir Peter Bonfield. The other members are the
Deputy Chief Executive, the Group Finance Director, the
heads of BT’s three customer-facing divisions and the
network and systems division, the Secretary and Chief
Legal Adviser, the Group Personnel Director and the two
executives responsible for developing the group’s strategy
and plans. The Committee develops the group’s strategy,
for Board approval, and oversees implementation. It also
finalises (before Board approval) annual quality plans and
budgets and reviews operational activities.
The Nominating Committee of the Chairman, Deputy
Chairman and four other non-executive directors ensures
the Board has an appropriate balance of expertise and
ability among the non-executive directors. For this
purpose it has agreed, and regularly reviews, a profile of
the required skills and attributes. This profile is used to
assess the suitability as non-executive directors
of candidates put forward by the directors and outside
consultants. Candidates short-listed for appointment
are met by the Committee before it recommends an
appointment to the Board.
The Committee also assesses candidates for executive
directorships before it recommends an appointment.
The Board Audit Committee, consisting solely of
non-executive directors, is chaired by Sir Colin Marshall.
Its terms of reference include reviewing BT’s internal
controls and published financial reports for statutory
compliance and against standards of best practice, and
recommending appropriate disclosure to the Board. It also
reviews annually the services and fees of the company’s
auditors, to ensure that an objective and professional
relationship is maintained.
There are also two Board remuneration committees.
The Board Committee on Executive Remuneration consists
solely of non-executive directors and is chaired by
Sir Colin Marshall. It agrees the service agreements
of the Chairman and the members of the Executive
Committee and their remuneration, including
performance-related bonuses. The separate report
by the Committee is set out on pages 27 to 33.