BT 2001 Annual Report Download - page 53

Corporate Governance
BT’s policy is to achieve best practice in our standards of
business integrity for all our activities around the world. This
includes a commitment to the highest standards of corporate
governance throughout the group. This section of the annual
report describes how BT has applied the principles set out in
Section 1 of the Combined Code on Corporate Governance
(the Code).
The directors consider that, throughout the year, BT has
fully complied with the provisions set out in Section 1 of the
Code.
The Board
The Board meets every month, except in August. Its principal
focus is the overall strategic direction, development and control
of the group. Key matters, such as approval of the group’s
strategic plans and annual operating plan and budget, and
monitoring the company’s operating and ¢nancial performance,
are reserved for the Board. These are set out in a formal
statement of the Board’s role.
BT’s aim is for approximately two-thirds of the Board to
be non-executive directors. Of the current 12 directors, nine are
independent, non-executive directors. Two directors are
full-time executives. The Chairman is part-time. Between them,
the non-executive directors bring experience and independent
judgement at a senior level of international business operations
and strategy, marketing, communications and international
a¡airs.
The non-executive directors provide a strong independent
element on the Board with Lord Marshall and Sir Anthony
Greener, the Joint Deputy Chairmen, as the senior independent
members. However, the Board operates as a single team.
Non-executive directors are appointed initially for three
years. Towards the end of that period, the Board considers, on
the recommendation of the Nominating Committee, whether to
continue the appointment. Appointments will be reviewed again
by the Board before the end of the sixth year. After the third
anniversary, appointments can be terminated by either the
director or BT on 12 months’ written notice. Normally,
non-executive directors will remain in o⁄ce for no more than
ten years. Lord Marshall’s contract was renewed for a second
three-year term from 1 April 1998. It was extended in June 2000
to the end of this year’s annual general meeting when Lord
Marshall will retire. Sir Anthony Greener’s contract is for a
three-year term from 1 October 2000.
All directors are required by the company’s articles of
association to be elected by shareholders at the ¢rst annual
general meeting after their appointment. At least one-third of
the other directors must seek re-election by the shareholders
each year. This can mean that directors are not necessarily
re-elected every three years. To comply with the Code, BT’s
policy is that, in practice, no director stays in o⁄ce for more
than three years without re-election.
The Chairman and executive directors have service
agreements, which are approved by the Remuneration
Committee. Information about the periods of these contracts is
in the Report on directors’ remuneration on page 70.
The Board has a procedure for directors, in furtherance of
their duties, to take independent professional advice if
necessary, at the company’s expense. In addition, all directors
have access to the advice and services of the Secretary, the
removalofwhomisamatterforthewholeBoard.Headvises
the Board on appropriate procedures for the management of its
meetings and duties, as well as the implementation of corporate
governance and compliance in the group.
On appointment, directors take part in an induction
programme when they receive information about BT, the formal
statement of the Board’s role, the terms of reference and
memberships of the principal Board and management
committees, including the powers that have been delegated to
the management committees, the company’s corporate
governance framework and executive reserved powers and
latest ¢nancial information about the group. This is
supplemented by visits to key BT locations and meetings with
members of the Executive Committee and other key senior
executives. Throughout their period in o⁄ce, they are updated
on BT’s business, the competitive and regulatory environments
in which it operates and other changes, by written brie¢ngs
and meetings with senior BT executives. Directors are also
advised on appointment of their legal and other obligations as
a director of a listed company, both in writing and in face-to-
face meetings with the Secretary. They are reminded of these
obligations each year and are encouraged to attend training
courses at the company’s expense.
Guidelines are in place concerning the content,
presentation and delivery of papers to directors for each Board
meeting, so that the directors have enough information to be
properly briefed.
Principal Board committees
The Chief Executive, Sir Peter Bon¢eld, chairs the Executive
Committee. The other members are the Group Finance Director,
the Group Commercial Director and Secretary, the Group
Personnel Director, the Chief Executive O⁄cers of the following
lines of business (BT Wireless, BT Ignite, BTopenworld, BT
Wholesale and BT Retail), the Chief Executive of BT Business
Services, the Group Strategy and Development Director, the
Group Communications Director, the Group Engineering
Director and Chief Technology O⁄cer and the Restructuring
BT Annual report and Form 20-F 53