BT 2006 Annual Report Download - page 47

retained as treasury shares. At 17 May 2006, 22 million
treasury shares had been transferred to meet the company’s
obligations under its employee share plans.
RELATIONS WITH SHAREHOLDERS
Senior executives, led by the Chief Executive and the Group
Finance Director and including, as appropriate, the other
executive directors, hold meetings with the company’s principal
institutional shareholders to discuss the company’s strategy,
financial performance and specific major investment activities.
The Deputy Chairman also attends, at his discretion and in
consultation with the Chairman and the Chief Executive,
meetings with shareholders during the year. All non-executive
directors have an invitation to attend investors’ meetings if they
wish. The company also maintains contact with investors, when
appropriate, through the chairman of the Remuneration
Committee and other senior executives to discuss overall
remuneration policies and plans. Contact with institutional
shareholders (and with financial analysts, brokers and the
media) is controlled by written guidelines to ensure the
protection of share price sensitive information that has not
already been made generally available to the company’s
shareholders. The directors are provided with either full or
summarised reports and other written briefings from the
company’s major shareholders and analysts and are regularly
informed by the Secretary about the holdings of its principal
shareholders. The Secretary also surveys the company’s retail
shareholders about the quality of the company’s shareholder
communications and share registration services.
We are continuing our policy that shareholders vote on the
annual report at the AGM. Shareholders will also again be asked
to vote separately on the Report on directors’ remuneration.
It is part of our policy to involve shareholders fully in the
affairs of the company and to give them the opportunity at the
AGM to ask questions about the company’s activities and
prospects. We also give the shareholders the opportunity to
vote on every substantially different issue by proposing a
separate resolution for each issue.
The proxy votes for and against each resolution, as well as
abstentions, will be counted before the AGM and the results will
be made available at the meeting after the shareholders have
voted on each resolution on a show of hands and at the end of
the meeting. It is our policy for all directors to attend the AGM
if at all possible. Whilst, because of ill health or other pressing
reasons, this may not always be possible, in normal
circumstances this means that the chairmen of the Audit,
Nominating and Remuneration committees are at the AGM and
are available to answer relevant questions. All the directors
attended the 2005 AGM.
The Annual Review and Notice of Meeting 2006 and, if
requested, the Annual Report and Form 20-F, are sent to
shareholders in the most cost-effective fashion, given the large
number of shareholders. We aim to give as much notice as
possible and at least 21 clear days, as required by the
company’s articles of association. In practice, these documents
are being sent to shareholders more than 20 working days
before the AGM.
Established procedures ensure the timely release of share
price sensitive information and the publication of the company’s
financial results and regulatory financial statements. All external
announcements are also reviewed for accuracy and compliance
requirements by a committee of senior executives, the
Disclosure Committee, which is chaired by the Secretary.
STATEMENT OF BUSINESS PRACTICE
To reinforce our commitment to achieve best practice in our
standards of business integrity and ethics, BT has had in place a
written statement of business practice (The Way We Work) for
nearly seven years. The statement covers all our operations. A
copy of the statement has been sent to every employee and is
available in eight languages. Copies are also sent to the
employees of newly acquired subsidiaries.
These high-level principles are supported by a continuing
and comprehensive communications programme and online
training. A confidential helpline and dedicated e-mail facility are
also available to employees who have questions about the
application of these principles. The helpline number is published
externally as part of the statement of business practice. We also
continue to require our agents and contractors to apply these
principles when representing BT. BT’s new Undertakings code
of practice (It Matters) forms part of BT’s statement of business
practice and is consistent with it.
PENSION FUNDS
BT’s two main pension funds – the BT Pension Scheme and the
BT Retirement Plan – are not controlled by the Board but by
separate trustees who are company and union nominees, under
independent chairmen. The trustees look after the assets of the
funds, which are held separately from those of the company.
The pension funds’ assets can only be used in accordance with
their respective rules and for no other purpose.
INTERNAL CONTROL AND RISK MANAGEMENT
The Board is responsible for the group’s systems of internal
control and risk management and for reviewing the
effectiveness of those systems, which it does annually. Such
systems are designed to manage, rather than eliminate, the risk
of failure to achieve business objectives; any system can provide
only reasonable and not absolute assurance against material
misstatement or loss.
The Board also takes account of significant social,
environmental and ethical matters that relate to BT’s
businesses and reviews annually BT’s corporate social
responsibility. The company’s workplace practices, specific
environmental, social and ethical risks and opportunities and
details of underlying governance processes are dealt with in the
Business review – Motivating our people and living the BT
values and Our commitment to society.
BT has processes for identifying, evaluating and managing
the significant risks faced by the group. These processes have
been in place for the whole of the 2006 financial year and have
continued up to the date on which this document was
approved. The processes are in accordance with the Internal
Control: Guidance for Directors on the Combined Code first
published in the UK in September 1999.
Risk assessment and evaluation takes place as an integral
part of the group’s annual strategic planning cycle. The group
has a detailed risk management process, culminating in a Board
review, which identifies the key risks facing the group and each
business unit. This information is reviewed by senior
management as part of the strategic review. The group’s
current key risks are summarised in Business Review – Group
risk factors.
The key features of the risk management process comprise
the following procedures:
ssenior executives, led by the Secretary, review the group’s
key risks and have created a group risk register describing
the risks, owners and mitigation strategies. This is reviewed
Report of the directors BT Group plc Annual Report and Form 20-F 2006 45