BT 2013 Annual Report Download - page 85

Governance
Governance 83
Governance
Governance 83
The table below sets out the proposed ISP 2013 awards that are
expected to be made in June 2013. These awards are based on an
incentive share award of 2.5x salary for the Chief Executive (2012: 2.5x
salary) and 2x salary for other executive directors (2012: 2x salary).
Director ISP Awarda
Ian Livingston 834,838 shares
Tony Chanmugam 397,112 shares
Gavin Patterson 422,383 shares
a ISP grant to be awarded. An estimate of the number of shares awarded calculated
using the average closing market share price for the 3 month period 1 February to
30April 2013 of £2.77.
2013/14 Remuneration Scenarios
The committee has considered the level of total remuneration that
would be payable under different performance scenarios and is satisfied
that, as the graph below illustrates, executive pay remains closely
aligned with shareholders’ interests.
Minimum On-target Maximum
0
2
4
6
8
£m
10
14
Comparison of BT’s potential total compensation for the
Chief Executive under various performance scenarios, with
referenceto the BT pay benchmarking comparator group
Minimum performance – base salary only
On-target performance – base salary plus on-target annual bonus plus threshold
vesting under the ISP
Maximum performance – base salary plus maximum annual bonus plus
maximum vesting under the ISP.
Appropriate share price growth assumptions have been incorporated
in all scenarios illustrated.
If comparing this chart to the performance scenario chart presented on page 84, the
following differences in methodology should be noted:
— this chart incorporates appropriate share price growth assumptions for BT Group and
all comparator group companies; and
— this chart does not include the value of any benefits or pension contributions during
the year.
Performance delivered
Total direct compensation
Upper market range Lower market range BT Group
12
TSR for these purposes is calculated by JPMorgan Cazenove. TSR links
the reward given to directors with the performance of BT against other
major companies. TSR is measured against a comparator group which
contains European telecommunications companies and companies
which are either similar in size or market capitalisation and/or have a
similar business mix and spread to BT.
The TSR comparator group for awards to be granted in June 2013
comprises the following companies:
Accenture France Telecom Telecom Italia
AT & T Hellenic Telecom Telefónica
Belgacom IBM Telekom Austria
BSkyB National Grid Telenor
BT Group Portugal Telecom TeliaSonera
Cap Gemini Royal KPN Verizon
Centrica Swisscom Virgin Media
Deutsche Telekom TalkTalk Vodafone
The TSR comparator group is the same for awards granted in June 2012
and June 2011 except for the deletion of Cable & Wireless Worldwide
which has been acquired by Vodafone.
The TSR for a company is calculated by comparing the return index (RI)
at the beginning of the performance period with the RI at the end of
the period. The RI is the TSR value of a company measured on a daily
basis, as tracked by independent analysts, Datastream. It uses the official
closing prices for a company’s shares, adjusted for all capital actions and
dividends paid. The initial RI is determined by calculating the average
RI value taken daily over the three months prior to the beginning of the
performance period; and the end value is determined by calculating
the average RI over the three months up to the end of the performance
period. This mitigates the effects of share price volatility. A positive
change between the initial and end values indicates growth in TSR.
TSR vesting schedule for awards of incentive shares
granted in 2013
For awards to be made in June 2013, 40% of the potential outcome is
based on relative TSR. The following graph shows the potential vesting
of awards to be granted in 2013 based on the TSR element.
)'(*8nXi[j
TSR ranking position
% of share award vesting
0%
10%
20%
30%
40%
0 5 10 15 20 25