BT 1998 Annual Report Download - page 36

R E P O RT O N D I R E C T O R S ’ R E M U N E R AT I O N
increase on a uniform basis from 52% at age 55 to
two-thirds at age 60. Bill Cockburn is a member
of the BTPS and has an unfunded and unapproved
arrangement to meet the shortfall resulting from
the pensions cap. In addition he has a funded
unapproved retirement benefits scheme transferred
from his previous employer to which the company is
making contributions of £120,000 over the 12
months from 1 March 1998. Mr Cockburn’s salary
has been reduced, at his request, by £120,000
during this period.
The table on page 35 shows the increase in the
accrued benefits to which each director has become
entitled during the year and the transfer value of the
increase in accrued benefit.
•Other benefits
Other benefits include car and driver, personal
telecommunications facilities, medical cover for
the director and immediate family and financial
counselling. In addition to his company car, Sir Iain
Vallance has the use of a pool car in Scotland for
occasional private use and pays tax accordingly.
Service agreements
It is the company’s policy that all the executive directors
have service agreements for a period of one year, that
they contain provisions for the removal of a director
through poor performance and deal with payments to
which the director would be entitled if he was removed
from office, except for misconduct. The initial three-
year term of Sir Peter Bonfield’s contract was last year
extended, as part of the preparations for the merger
with MCI, to 31 December 1999 after which time it can
be terminated by either party giving twelve months’
notice. Bill Cockburn has an initial two-year contract
effective from 1 October 1997 which can be terminated
at any time after 30 September 1999 by either party
giving 12 months’ notice. Sir Iain Vallance’s and Robert
Brace’s contracts can be terminated by the director or
BT giving 12 months’ notice.
Outside appointments
The Committee believes there are significant benefits
to both the company and the individual from executive
directors accepting non-executive directorships of
companies outside the BT Group. The Committee will
consider approving up to two external appointments for
which the director may retain the fees.
Non-executive directors’ remuneration
The Board has delegated the determination of
remuneration for non-executive directors to the Chairman
and Chief Executive. They seek external advice on
appropriate levels of remuneration. Section A of the best
practice provisions of the Stock Exchange Listing Rules
says that non-executives’ remuneration should be
determined by the Board. As the intention is that two-thirds
of the BT Board are non-executives who could not vote on
their own remuneration, the Board does not consider it
appropriate for the whole Board to undertake this role.
The basic fee for non-executive directors, which includes
membership of one committee, is £25,000 per year.
Additional fees for membership of most other Board
committees range from £3,000 to £5,000 per year.
Committee chairmen receive an additional fee of £2,000
a year for each committee they chair. Sir Colin Marshall
received an inclusive fee of £65,000 last year as Deputy
Chairman which increased to £75,000 with effect from
1 April 1998.