BT 2006 Annual Report Download - page 52

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The Report on directors’ remuneration is divided into the
following sections:
rREMUNERATION POLICY (NOT AUDITED)
(i) Constitution and process
(ii) Packages and financial year 2005/06 operation
(iii) Annual package –financial year 2006/07
(iv) Other matters
Executive share ownership
Pensions
Other benefits
Service agreements
Outside appointments
Non-executive directors’ letters of appointment
Non-executive directors’ remuneration
Directors’ service agreements and contracts of
appointment
Directors’ interests
Performance graph
rREMUNERATION REVIEW (AUDITED)
Directors’ emoluments
Former directors
Loans
Pensions
Share options
Share awards under long-term incentive schemes
Vesting of outstanding share awards and options
Deferred Bonus Plan
Share awards under the Employee Share Investment
Plan (ESIP)
Operating Committee
REMUNERATION POLICY
This part of the Report on directors’ remuneration is not
subject to audit.
(i) Constitution and process
The directors consider that BT has, thoughout the year,
complied with the provisions set out in Section 1 of the 2003
Combined Code on Corporate Governance. Shareholders will be
invited to approve this report at the company’s 2006 AGM. The
Board is ultimately responsible for both the structure and
amount of executive remuneration, but it has delegated prime
responsibility for executive remuneration to the Remuneration
Committee. The Committee is made up wholly of independent
non-executive directors. The terms of reference of the
Committee are available on the company’s website at
www.bt.com/committees. The Committee’s role is to set the
remuneration policy and individual remuneration packages for
the Chairman and the senior management team, comprising
the executive directors, members of the Operating Committee
(OC) and other senior executives reporting to the Chief
Executive. This includes approving changes to the company’s
long-term incentive plans, recommending to the Board those
plans which require shareholder approval and overseeing their
operation. In this role the Committee also monitors the
structure of reward for executives reporting to the senior
management team and determines the basis on which awards
are granted under the company’s executive share plans. The
Committee met four times during the financial year 2005/06.
Sir Anthony Greener has chaired the Committee since 18 July
2001. Other members of the Committee who served during the
financial years 2004/05 and 2005/06 were:
sMatti Alahuhta (appointed 7 February 2006)
sMaarten van den Bergh
sLou Hughes
sMargaret Jay
sCarl Symon.
Lou Hughes stepped down from the Committee on 31 March
2006 when he left the Board.
The Chairman and Chief Executive are invited to attend
meetings. They are not present when matters affecting their
own remuneration arrangements are considered. No director or
executive is involved in any decision relating to his or her
remuneration. Non-executive directors who are not members of
the Committee are entitled to receive papers and minutes of
the Committee. The Committee had access during the year to
professional advisers, both from within the company and
externally. Towers Perrin (Remuneration consultants) and
Kepler Associates (Remuneration consultants), who were
appointed by the company; Ben Verwaayen, Chief Executive;
Hanif Lalani, Group Finance Director; Alex Wilson, Group HR
Director and Larry Stone, Company Secretary, provided advice
that materially assisted the Committee in relation to directors’
remuneration in the financial year 2005/06. Remuneration
consultants provide a range of data and advisory services
covering all aspects of executive pay, bonus arrangements,
shares and benefits. The Committee agreed that its
Remuneration consultants, Kepler Associates, may advise both
the Committee and BT, and should be invited to attend
meetings when major remuneration policy issues were
discussed. Towers Perrin provides market data.
BT’s executive remuneration policy is to reward employees
competitively, taking into account individual line of business
and company performance, market comparisons, and the
competitive pressures in the information and communications
technology industry as BT focuses on growth through
transformation. Base salaries are positioned around the mid-
REPORT ON DIRECTORS’ REMUNERATION
BT Group plc Annual Report and Form 20-F 2006 Report on directors’ remuneration50