BT 2014 Annual Report Download - page 112

109
Governance
Governance
ISP awards have been shown at face value, with no share price growth
or discount rate assumptions. All-employee share plans (Saveshare and
Directshare) have been excluded, as have any legacy awards held by
executive directors.
87 5 263410£m
Chief Executive – performance scenario chart
Minimum
On-target
Maximum
Fixed remuneration
100%
38%
34%28%
17%
31%52%
Variable remuneration Long-term incentives
£3.4m
£7.4m
£1.3m
4 3.5 2.5 13 1.52 0.5 0 £m
Group Finance Director – performance scenario chart
Minimum
On-target
Maximum
Fixed remuneration
100%
43%
34%23%
21%
34%45%
Variable remuneration Long-term incentives
£3.9m
£2.0m
£0.85m
Fixed pay is calculated as follows
Salary
£000
Benets
£000
Pension
£000
Total
xed pay
£000
Chief Executive 950 43 285 1,278
Group Finance Director 630 32 189 851
Other Remuneration Policies
Malus
Under the terms of the DBP and ISP, if following the grant of an award,
facts subsequently become known to the committee which would justify
a reduction in the award, the committee may reduce the number of
shares under award to take account of this, including to nil. In order to
retain exibility, the events under which this may apply are not formally
stipulated in the rules. However, for illustration, such events may include,
for example, miss-statement of the nancial accounts, fraud or material
failure of risk management. Other elements of remuneration are not
subject to recovery arrangements.
Dilution
For a number of years we have generally used treasury shares to satisfy
the exercise of share options and the vesting of share awards under our
employee share plans. We intend to use both treasury shares and shares
purchased by the BT Group Employee Share Ownership Trust (the Trust)
for share option exercises, and shares purchased by the Trust for the
vesting of executive share awards in 2014/15. At the end of 2013/14,
shares equivalent to 9.35% of the issued share capital (excluding
treasury shares) would be required for all share options and awards
outstanding. Of these, we estimate that for 2014/15, shares equivalent
to approximately 3.81% of the issued share capital (excluding treasury
shares) will be required for all the employee share plans.
Consideration of shareholder views
The committee is strongly committed to an open and transparent
dialogue with shareholders on remuneration matters. We believe that it
is important to meet regularly with our key shareholders to understand
their views on our remuneration arrangements and discuss our approach
going forward.
The committee will continue to engage with shareholders going forward
and will aim to consult on any material changes to the application of the
approved remuneration policy or proposed changes to the policy.
Non-executive directors
The Board aims to recruit high-calibre Non-Executive Directors (NEDs),
with broad commercial, international or other relevant experience.
The table of remuneration policy for NEDs is set out on page 110.
Non-executive directors’ letters of appointment
Each non-executive director has an appointment letter setting out the
terms of his or her appointment. They do not have service contracts.
The letter includes membership of any Board committees, the fees to be
paid and the time commitment expected. We ask each non-executive
director to allow a minimum commitment of 22 days each year, subject
to committee responsibilities, and to allow slightly more in the rst
year in order to take part in the induction programme. The actual time
commitment required in any year may vary depending on business.
We highlight that additional time may be required if the company is
going through increased activity.
Appointments are for an initial period of three years. During that
period, either party can give the other at least three months’ notice of
termination. All Board appointments automatically terminate in the
event of a director not being elected or re-elected by shareholders at the
Annual General Meeting each year. The appointment of a non-executive
director is terminable on notice by the company without compensation.
At the end of the period, the appointment may be continued by
mutual agreement. Further details of appointment arrangements for
non-executive directors are set out on page 110.
The appointment letter also covers matters such as condentiality,
data protection and BT’s share dealing code.
We reviewed the directors’ appointment letters during the year and
provided each non-executive director with an updated letter of
appointment to incorporate in particular the changes required by the
new regimes for directors’ remuneration reporting and voting.
Inspection by the public
The service agreements and letters of appointment are open for
inspection by the public at the registered oce of the company.
They will also be available for inspection commencing one hour prior to
the start of our AGM, to be held in London on 16 July 2014.
Non-executive directors’ remuneration
Non-executive directors, in accordance with BT’s Articles of Association,
cannot individually vote on their own remuneration. Non-executive
director remuneration is reviewed by the Chairman and the executive
directors, and discussed and agreed by the Board. Non-executive
directors may attend the Board discussion but may not participate in it.
An additional fee of £2,000 per trip is paid to those non-executive
directors travelling from overseas on an inter-continental basis to Board
and Board committee meetings.
To align further the interests of the non-executive directors with
those of shareholders, the company’s policy is to encourage directors
to purchase, on a voluntary basis, BT shares to the aggregate value of
£5,000 each year for each year of service. The directors are asked to
hold these shares until they retire from the Board. This policy is
not mandatory.
No element of non-executive director remuneration is performance-
related. Non-executive directors do not participate in BT’s bonus or
employee share plans and are not members of any of the company
pension schemes.