BT 2014 Annual Report Download - page 95

92 Governance
During the three-year performance cycle just ended for the ISP,
shareholders have experienced a 139% Total Shareholder Return (TSR)
and when combined with very positive cash ow performance, the ISP
2011 vested at 78.7% of maximum, compared to 100% last year,
reecting the level of stretch in the targets the committee set in 2011.
More information on ISP vesting is set out on page 94.
Total remuneration for the year is summarised in the
single Ƭgure table on page 93
Our employees are also sharing in BT’s improved performance.
Over22,000 individuals who invested in our ve-year SAYE plan,
withan option price of 61p, are currently expected to make signicant
gains in the summer of 2014 when these options mature.
Looking ahead
As outlined above, we have responded to feedback from our
shareholders and re-balanced our remuneration framework to drive
long-term, sustainable protable revenue growth, in line with our
business strategy and shareholder interests, whilst being mindful not to
encourage inappropriate risk-taking. For 2014/15, executive directors’
pay arrangements will be structured in line with this re-balanced
framework.
We have made two further changes to increase the alignment of our pay
framework with shareholders’ interests
•
Holding period – For ISP awards made in 2014 onwards, executive
directors will be required to hold the net shares received on vesting
following payment of tax and other statutory deductions for two
years, following the end of the three-year performance period.
•
Increase to shareholding guidelines – For 2014/15, our shareholding
guideline for the Chief Executive has been increased from 200% to
300% of salary.
In terms of base salary, we aim to position executive directors below
median against our comparator group. In recognition of the exceptional
support and stability which Tony Chanmugam provided during the
transition of the Chief Executive, the committee considered that an
increase of Tony’s salary to £600,000 during the year was appropriate
(from £550,000). Subsequently, as part of our re-balancing of the
remuneration framework, and within the context of the overall reduction
in his target remuneration opportunity, the committee wished to
recognise Tony’s continued strong performance during the year and
thestability which he brings to the company at this time. As such,
Tony’ssalary will increase to £630,000 per annum, eective June
2014,which remains well below median when compared to similar
rolesin comparable companies.
Gavin Patterson will receive a salary increase to £950,000 per annum
(from £925,000), eective June 2014, an increase of 2.7%. This is
within the mid-range of pay awards for our managerial and technical
specialist population (around 23,000 people). Pay awards for the
majority of this population are agreed through consultation and
collective bargaining with the Prospect trade union.
The committee has continued to maintain the link between pay and
performance and our policy report sets out our continuing philosophy
forthe next three years.
Tony Ball
Chairman of the Remuneration Committee
7 May 2014