BT 2014 Annual Report Download - page 107

104 Governance
Remuneration Principles
Our remuneration principles are to maintain a competitive remuneration
package that will attract, retain and motivate a high quality top team,
avoid excessive or inappropriate risk taking and align their interests with
those of shareholders.
We believe in pay for performance against challenging targets and stretching
goals for the annual bonus (including deferred shares) and long-term
incentive shares. Our approach is to set base salaries below the median for our
comparator group. A signicant proportion of the total remuneration package
is therefore variable and linked to corporate performance.
The committee determines the remuneration policy for the executive
directors and the Chairman. The Chairman is not a member of the
committee.
The committee reviews the performance targets regularly to ensure
that they are both challenging and closely linked to the group’s strategic
priorities. Furthermore, because a large part of the remuneration
package is delivered in shares and senior executives are required to
build up a signicant shareholding themselves, they are directly exposed
to the same gains or losses as all other shareholders.
Targets for performance are established at above consensus market
expectation at the time they are set.
In setting directors’ remuneration, the committee takes account of the
remuneration of other companies of similar sie and complexity, using
a comparator group dened with the assistance of our independent
remuneration consultants Deloitte. The committee also takes into
account the pay and employment conditions of all our employees.
The committee continues to keep under review the relationship of risk
to remuneration. The Chair of the
Audit & Risk Committee is a member
of the
Remuneration Committee . The Audit & Risk Committee and
Nominating & Governance Committee held a joint session during the
year to cover areas of common interest to both committees.
The committee is also satised that the incentive structure for senior
executives does not raise environmental, social or governance risks by
inadvertently motivating irresponsible behaviour. Part of the annual
bonus depends upon an assessment of each senior executive’s personal
contribution to the purposeful company measures, including results
of the regular employee surveys and health and safety outcomes.
Adherence to these measures is a basic criterion expected of all
executives.
The committee retains absolute discretion to reduce variable
compensation in light of risk and the group’s overall performance.
We would only use this in exceptional circumstances.
Remuneration policy
The following pages set out our Directors’ remuneration policy (the
Policy) which will be put forward for shareholder approval at the
2014 AGM on 16July 2014 in accordance with section 439A of
the Companies Act 2006. The Policy will apply to any remuneration
payments or payments for loss of oce made on or after the AGM.
The Policy is divided into separate sections for the executive directors
and the Chairman and the non-executive directors.
Legacy matters
The committee may make remuneration payments and payments for loss
of oce outside of the Policy below, where the terms of the payment
were agreed before the Policy came into eect, or at a time when
the relevant individual was not an executive director of the company
(provided that, in the opinion of the committee, the payment was not in
consideration for the individual becoming an executive director of the
company). This includes the exercise of any discretion available to the
committee in connection with such payments. Any legacy payments will
be disclosed in the Annual Remuneration Report for the relevant year.
Minor amendments
The committee may make minor amendments to the arrangements
for the directors as described in the Policy, for regulatory, exchange
control, tax or administrative purposes, or to take account of a change in
legislation.