BT 2014 Annual Report Download - page 110

107
Governance
Governance
Remuneration arrangements throughout the company
BT operates in a number of dierent environments and has many
employees who carry out diverse jobs across a number of countries
• all employees, including directors, are paid by reference to the
market rate
• performance for managers is measured and rewarded through a
number of performance-related bonus schemes across the group
• business unit performance measures are cascaded down through
the organisation
• BT oers employment conditions that reect our values and are
commensurate with a large publicly listed company, including high
standards of health and safety and equal opportunities
• BT operates all employee share plans in many countries. These are
open to all employees where oered and
• BT oers a range of employee benets many of which are available
to everyone.
Recruitment
Our recruitment policy is based on a number of key principles
• we aim to provide a remuneration package which is sucient to
attract, retain and motivate key talent, while at all times ensuring that
we pay no more than is necessary, with due regard to the best interests
of the company and our shareholders
• the committee will take a number of factors into account in
determining the appropriate remuneration package. For example,
these may typically include the candidate’s experience and calibre,
their circumstances, external market inuences and arrangements
for existing executive directors
• the ongoing remuneration package oered to new directors will only
include those elements listed within the policy table
• the committee may also consider providing additional benets to
expatriate appointments, where appropriate and
• the committee will provide full details of the recruitment package for
new executive directors in the next Annual Report on Remuneration
and will provide shareholders with the rationale for the decisions that
were taken.
The maximum level of variable pay (excluding buyouts for which see
below) which may be awarded in respect of a recruitment event (internal
or external), will not exceed 740% of base salary, representing the
current maximum award under the annual bonus and ISP.
In addition, to facilitate recruitment, the committee may make a one-o
award to buy-out variable incentives which the individual would forfeit
at their current employer. The committee will give consideration to any
relevant factors, typically including the form of the award (e.g. cash or
shares), the proportion of the performance/vesting period outstanding
and the potential value of the forfeited remuneration, including
performance conditions attached to the awards, the likelihood of those
conditions being met, and the timing of any potential payments.
In making buying-out awards, the committee may use the relevant
provision in the Financial Conduct Authority Listing Rules. This allows for
the granting of awards specically to facilitate, in unusual circumstances,
the recruitment of an executive director, without seeking prior
shareholder approval. In doing so, the committee will comply with
the relevant provisions in force at the date of this report.
Where an executive director is appointed from within the organisation,
the company will honour legacy arrangements in line with the original
terms and conditions.
In the event of the appointment of a new non-executive director,
remuneration arrangements will be in line with those detailed on
page103.
Payment for loss of oƯce
In a departure event, the committee will typically consider
• whether any element of annual bonus should be paid for the nancial
year. Any bonus paid will be limited to the period served during the
nancial year in which the departure occurs
• whether any of the share element of deferred bonus awarded in prior
years should be preserved either in full or in part
• whether any awards under the ISP should be preserved either in full or
in part and if relevant whether the post vesting holding period should
apply.
The committee has historically maintained a discretionary approach to
the treatment of leavers, on the basis that the facts and circumstances
of each case are unique.
In an exit situation, the committee will consider the individual
circumstances any mitigating factors that might be relevant the
appropriate statutory and contractual position and the requirements
of the business for speed of change.
The default position is that an unvested ISP or DBP award or entitlement
lapses on cessation of employment, unless the committee applies
discretion to preserve some or all of the awards. This provides the
committee with the maximum exibility to review the facts and
circumstances of each case, allowing dierentiation between good
and bad leavers and avoiding payment for failure’.
When considering a departure event, there are a number of factors
which the committee takes into account in determining appropriate
treatment for outstanding incentive awards. These include
• the position under the relevant plan documentation
• the individual circumstances of the departure
• the performance of the company/individual during the year
to dateand
• the nature of the handover process.
In some cases, the treatment is formally prescribed under the rules of the
relevant plan so that where there are good leaver’ circumstances awards,
which would otherwise lapse by default, vest either on the normal vesting
date or on cessation of employment. These circumstances include death,
injury, ill-health, disability, redundancy or sale of the company or business.
If the director dies or leaves due to ill health or injury, ISP awards which
have less than 12 months of the performance period remaining or DBP
awards which have less than 12 months of the deferred period to run, vest
automatically on leaving. In other leaver circumstances the committee has
discretion to determine when, and to what extent, awards vest.
The committee considers the leaver circumstances along a continuum,
ranging from bad leaver’ scenarios such as termination of employment
for gross misconduct or resignation, through to the good leaver’
scenarios outlined above. Accordingly the committee may apply
(or disapply) such performance conditions or time pro-rating to awards
vesting in these circumstances as it considers appropriate.
All-employee plans – leavers
The treatment of saveshare options and directshare shares on leaving is
as determined under the respective HMRC approved rules. For saveshare,
someone who ceases to be an employee in special circumstances
(for example injury, disability, death, or following sale of the company
or business where they work) may exercise the option within six months
after leaving (or 12 months in the case of death) or the relevant
corporate event. If someone leaves for a reason not falling within special
circumstances, the option lapses on the date the individual leaves.
ISP/DBP – change of control
In the event of a takeover or scheme of arrangement involving the
company, ISP and DBP awards will vest, at a minimum, to the extent that
any applicable performance measures have been satised at the time