BT 2014 Annual Report Download - page 100

97
Governance
Governance
Ian’s 2011 ISP award was based on a performance period of April 2011 to
March 2014. Taking into consideration the strong company and individual
performance during the performance period up to Ian’s departure date,
close to the end of the ISP 2011 performance period, his 2011 ISP award
was pro-rated to the end of his service after assessing the extent to which
the stretching performance conditions were met. In order to comply
withthe terms of the Ministerial Code, the shares vested on his last day
ofservice, 10 September 2013. Accordingly, the committee applied
adiscount equivalent to 5% per annum, to reect the early vesting.
Thecommittee entered into an agreement with Ian Livingston,
providingthat if the committee later became aware of any facts which
would have resulted in a lower level of vesting, that he would transfer to the
company such shares (or cash equivalent) as the committeedetermines.
The committee determined that Ian’s 2012 and 2013 ISP awards
shouldlapse in full. These forfeited awards could have represented over
2.4m shares, with a value of up to £9.1m at the date of lapse.
Ian received salary and contractual benets in lieu of a three-month
notice period in the amount of £306,831. This was less than that to
which he was contractually entitled. He also received a part-year cash
bonus for the period of his actual service during the year as shown in the
table on page 93.
Directors’ share ownership
The committee believes that the interests of the executive directors
should be closely aligned with those of shareholders. The deferred shares
and incentive shares provide considerable alignment.
To increase the alignment between shareholders and executive directors,
the committee increased the share ownership required. The Chief
Executive is required to build up a shareholding value equal to 300%
of salary (up from 200%) and the Group Finance Director 150% of
salary. They are encouraged to build up a shareholding in the company
over time by retaining shares which they have received under an
executive share plan (other than shares sold to meet a National Insurance
contribution or income tax liability) or from purchases in the market.
At 31 March 2014, both the executive directors had met the
shareholding requirements, as set out in the table below
Executive Director
Personal shareholding as
a percentage of salary
Gavin Patterson 442%
Tony Chanmugam 326%
Ian Livingstona855%
a As at 10 September 2013.
The following table shows the total unvested interests held by the
executive directors in the ISP and DBP. The numbers represent the
maximum possible vesting levels. The ISP awards will only vest to the
extent the performance conditions are met over a three-year period.
Full details of all ISP and DBP awards, including performance periods
andvesting conditions, are set out on pages 98 to 99.
ISP (subject to performance) DBP (not subject to performance)
1 April 2013 31 March 2014 1 April 2013 31 March 2014
Gavin Patterson 2,047,918 1,990,379 807,212 647,163
Tony Chanmugam 1,931,779 1,512,207 771,761 626,283
Ian Livingstona4,340,931 0 2,476,117 0
a Ian /ivingston retired on 10 September 2013. Details of Ian /ivingstonos ISP and DBP awards are
set out on page{96.
The following table shows share options held by the directors.
Asat 31March 2014 none of the directors held share options with
performance conditions.
Share options held without performance conditions (saveshare)
1 April
2013
Awarded
during
year
Exercised
during
year
Value at
date of
exercise
31 March
2014
Sir Michael Rake 1,485 –– – 1,485
Tony Chanmugam – 6,024 – – 6,024
Ian Livingstona769 ––– –
a Ian /ivingstons interest lapsed on his departure on 10 September 2013.
No Saveshare options were exercised by the directors during the year.
Directors’ interests at 31 March 2014 or date of retirement,
if earlier (audited)
The next section of the report has been audited.
The benecial interests of directors holding oce at the end of the year,
and their families, in the company’s shares at 31 March 2014 and 1April
2013, or at date of appointment if later, are shown below
 Number of shares
Benecial holdings 2014 2013
Sir Michael Rake 130,156 129,418
G Pattersona1,692,387 1,060,557
T Chanmugama774,925 543,318
I Livingstonb3,396,419 2,391,549
T Ball 22,561 21,950
W Eastc2,480 –
P Hewittd19,251 18,234
P Hodkinson 25,263 22,857
N Rose 50,000 50,000
K Richardsone7,750 3,000
J Whitbread 6,790 5,190
Total 6,127,982 4,246,073
a Includes free shares awarded under directshare.
b Ian /ivingston retired on 10 September 2013 and reƮects his holding at that date.
c Warren East joined the Board on 1 February 2014.
d Patricia +ewitt retired on 23 March 2014 and reƮects her holding at that date.
e Shares are held as 775 American Depositary Shares ADS). One ADS eTuates to 10 BT Group plc
ordinary shares.
During the period from 1 April 2014 to 7 May 2014, there were no
movements in directors benecial holdings.
The directors, as a group, benecially own less than 1% of the
companysshares.
The company also encourages the Chairman and non-executive
directorsto purchase, on a voluntary basis, BT shares with an aggregate
value of £5,000 on average each year to further align the interests of
non-executive directors with those of the shareholders. The directors are
asked tohold these shares until they retire from the Board. This policy
isnotmandatory.