BT 1999 Annual Report Download - page 45

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Corporate governance
It is BT’s policy in all our activities around the world to
achieve best practice in our standards of business integrity.
This includes a commitment to follow the highest standards
of corporate governance throughout the BT group. This
section of the annual report describes how BT has applied
the principles set out by the London Stock Exchange, for all
UK listed companies, in Section 1 of the Combined Code
(the Code).
The directors consider that, throughout the year, BT has
fully complied with the provisions set out in Section 1
of the Code.
The Board
The Board continues to meet every month, except in
August. Its principal focus is the overall strategic direction,
development and control of the group. Key matters, such as
approval of the group’s strategic plans and annual operating
plan and budget, and monitoring the company’s operating
and financial performance, are reserved for the Board.
These reserved matters are set out in a formal statement
of the Board’s role. It is sent to all directors, key senior
executives and managers involved in the management
of the company’s principal operations, together with
information on the authorities delegated by the Board and
the terms of reference and membership of the principal
Board and management committees.
BT’s aim is for the Board to comprise approximately two-
thirds non-executive directors. Six of the ten current
directors are non-executive, all of whom are independent of
the management of BT. Between them, the non-executive
directors bring experience and independent judgement
at a senior level of international business operations and
strategy, marketing, doing business in the key markets in
which the group now operates and international affairs.
The non-executive directors provide a strong independent
element on the Board with Lord Marshall, Deputy
Chairman, as the senior independent member. However,
the Board operates as a single team.
Non-executive directors are 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 Deputy Chairman’s contract was renewed for a second
three-year term from 1 April 1998. It may be terminated on
twelve months’ notice.
All directors are required by the company’s articles of
association to be elected by shareholders at the first annual
general meeting after their appointment. One third of the
other directors must seek re-election by the shareholders
each year. This can mean that directors are not necessarily
re-elected every three years. Shareholders will be asked at
this year’s annual general meeting (AGM) to approve a
change to the articles of association to clarify the position.
To comply this year with the Code, four directors will retire
by rotation and seek re-election rather than three as
required by the articles of association.
The Chairman and executive directors have service
agreements, which are reviewed by the Remuneration
Committee. Information about the periods of these contracts
is in the Report on directors’ remuneration.
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 Secretary, the removal of whom is a matter
for the whole Board. He advises the Board on appropriate
procedures for the management of its meetings and duties,
as well as the implementation of corporate governance and
compliance in the group.
On appointment, directors participate in an induction
programme when they receive information about BT,
the formal statement of the Board’s role, the powers which
have been delegated to the company’s senior managers and
management committees and latest financial information
about the group. This is supplemented by visits to key
BT locations and meetings with members of the Group
Executive Committee and other key senior executives.
Throughout their period in office this information is up-
dated as BT’s business, management structure and the
competitive and regulatory environments in which it
operates change. This can include further meetings
with senior BT executives. Directors are also advised
on appointment of their legal and other obligations as a
director of a listed company, both in writing and in face-to-
face meetings with the Secretary. They are reminded of
these obligations each year and are encouraged to attend
training courses at the company’s expense.
Guidelines are in place concerning the content,
presentation and delivery of papers to directors for each
Board meeting, so that the directors have enough
information to be properly briefed.