BT 1997 Annual Report Download - page 28

REPORT OF THE BOARD COMMITTEE ON EXECUTIVE REMUNERATION
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Mr Brace’s maximum bonus for 1997/98 will be
increased to 100% of salary, to allow the Committee
to take account of his contribution to completion of
the merger and the successful integration of the
two companies.
Bonus awards for executive directors for the year
under review ranged from 37% to 40% of current salary.
The structure of bonus arrangements will be reviewed
on completion of the merger.
3Long-term remuneration
Long Term Remuneration Plan
The Long Term Remuneration Plan (LTRP) was
approved by shareholders at the 1995 AGM. It was
designed to ensure that BT’s remuneration package
remains competitive, to encourage personal
investment in BT shares; to foster community of
interest with shareholders; to encourage key
executives to stay with BT and to link reward and
long-term corporate performance more effectively.
Under the plan, company shares are acquired by an
employee share ownership trust and are conditionally
awarded to participants, although participants will
only be entitled to these shares in full at the end of
a five-year period if the company has met a pre-
determined corporate performance measure and the
participants are still employed by the BT Group. The
performance measure is total shareholder return
relative to the FT-SE 100.
The LTRP was operated for a third time in 1996. Over
80 senior executives now participate in the plan and
the initial value of awards as a percentage of salary
under the 1996 operation ranged from 18% to 99%. It is
expected to be operated in 1997 for the last time. The
Chairman has not participated in the LTRP.
The future
The Committee believes it has a duty to shareholders
to ensure that Concert plc will be able to attract, retain
and develop senior executives with the right skills.
New share plans to operate for Concert plc after the
proposed merger are being put to shareholders for
approval at the 1997 annual general meeting. These
new share plans are designed to enable Concert plc to
achieve these objectives in all the markets in which it
will operate. A more detailed explanation of the new
plans is contained in the Notice of 1997 Annual
General Meeting circular sent to all shareholders.
3Pensions
For executive directors and other senior executives,
the policy is to provide pension benefits from all
sources of two-thirds of final salary at normal
retirement age of 60 with a two-thirds surviving
spouse’s pension. On death in service a lump sum
equal to four times annual salary is payable together
with a surviving spouse’s pension of two-thirds of the
director’s prospective pension. Pensions are based on
salary alone – bonuses, other benefits and long-term
incentives are excluded. The primary means of
providing pensions for the executive directors and
their dependants is through the BT Pension Scheme
(BTPS). All the executive directors, except Sir Peter
Bonfield, are members of the BTPS. For members of
the BTPS the company contributed 9.5% of salary to
the scheme and the individual contributed 6% of salary
in the year ended 31 March 1997. Where an individual
will not achieve the target level of pension benefit at
normal retirement age, the company may make up the
shortfall by purchasing additional service in the BTPS
and/or through non-approved, unfunded arrangements.
Sir Iain Vallance is a member of the BTPS and his
pension arrangements provide him with the flexibility
to retire at any time after age 55 with a pension
equivalent to two-thirds of his final salary. His
surviving spouse’s pension is two-thirds of his
pension. As a result of his intention to remain as
Co-Chairman of Concert plc for at least three years
after the proposed merger, Sir Iain will not take his
pension while he remains in full time employment
but the value of his pension will be increased in line
with inflation from his 55th birthday in May 1998. The
excess of Sir Iain’s pension entitlement above that
provided by the BTPS is unfunded.
Sir Peter Bonfield’s pension arrangements are non-
approved and unfunded and provide for a pension
of two-thirds of his final salary at age 60, inclusive of
any retained benefits from his previous employment,
and a surviving spouse’s pension of two-thirds of
his pension.