BT 2001 Annual Report Download - page 65

BT Annual report and Form 20-F 65
shareholding with a value of 100% of their salary over a period
of three years.
Pensions
For the executive directors and most other senior executives,
the policy is to provide pension bene¢ts of one-thirtieth of ¢nal
salary for each year of service with two-thirds of the
executive’s pension for the surviving spouse. The executive
directors and certain other senior executives have undertakings
of pension bene¢ts of two-thirds of ¢nal salary payable at
normal retirement age with a pension of two-thirds of the
director’s or executive’s pension for the surviving spouse. On
death-in-service, a lump sum equal to four times annual salary
is payable together with a pension of two-thirds of the
director’s or executive’s prospective pension for the surviving
spouse. Pensions are based on salary alone ^ bonuses, other
bene¢ts and long-term incentives are excluded.
Other benefits
Other bene¢ts for the Chairman and executive directors include
car and driver, personal telecommunications facilities, medical
and dental cover for the director and immediate family and
¢nancial counselling. The company has a permanent health
insurance policy to provide cover for the Chairman and full-
time executive directors and members of the EC who may
become permanently incapacitated.
Service agreements
The Chairman and executive directors have service agreements
providing for one year’s notice, except where it is necessary to
o¡er longer periods to new directors from outside BT or
circumstances make it appropriate to o¡er a longer ¢xed term.
All the service agreements contain provisions dealing with the
removal of a director through poor performance. They also deal
with payments to which the director would be entitled in the
eventofearlyterminationofthecontractbyBT.
Outside appointments
The Committee believes there are signi¢cant bene¢ts to both
the company and the individual from executive directors
accepting non-executive directorships of companies outside BT.
The Committee will consider up to two external appointments
for which a director may retain the fees.
Non-executive directors’ contracts of appointment
Non-executive directors have contracts of appointment. These
cover, amongst other things, the initial terms for which they
are appointed, a general statement of their role and duties, the
fees they will receive as a director and supplementary fees for
additional work such as being a member of a Board committee.
Non-executive directors are normally appointed for an
initial period of three years and are then subject to 12 months’
notice. Further details of their appointment arrangements are
set out on page 53 in the section of the annual report dealing
with corporate governance issues.
Non-executive directors’ remuneration
Three-quarters of the BT Board are non-executive directors
who, in accordance with BT’s articles of association and as
recommended by the Code, cannot individually vote on their
own remuneration. Therefore, the Board does not consider it
appropriate for the whole Board to determine non-executive
remuneration.ThisissetbytheChairmanandtheChief
Executive after considering advice on appropriate levels of
remuneration.
The basic fee for non-executive directors, which includes
membership of one committee, is »30,000 per year. Additional
fees for membership of Board committees range from »3,000 to
»5,000 per year. Committee chairmen receive an additional fee
of »2,000 per year for each committee they chair. Lord Marshall
is paid an inclusive annual fee of »75,000 (2000 ^ »75,000), as
Joint Deputy Chairman. Sir Anthony Greener, the other Joint
Deputy Chairman, is paid an inclusive annual fee of »60,000.
Sir Anthony’s fee will be increased to »90,000 when he
succeeds Lord Marshall as Deputy Chairman following the 2001
AGM.
To further align the interests of the non-executive directors
with those of shareholders, the company’s policy is to
encourage these directors to purchase, on a voluntary basis,
»5,000 of BT shares each year. The directors are asked to hold
these shares until they retire from the Board. This policy is not
mandatory.
Remuneration Review
Directors’ remuneration
Sir Christopher Bland was appointed Chairman on 1 May 2001.
His annual salary on appointment was »500,000 and he will not
be entitled to receive an annual bonus.
From 1 April 2001, Sir Peter Bon¢eld’s salary was
increased from »780,000 to »820,000 a year.
Sir Peter Bon¢eld’s annual bonus award in respect of the
2001 ¢nancial year is based predominantly on the achievement
of group-wide objectives and results measured against the
overall BT Corporate Scorecard. He is also bonused on
achievement of personal objectives. His on-target bonus for the
2001 ¢nancial year was increased from 65% to 75% of salary,
of which two-thirds remains targeted against the scorecard and
one-third against the achievement of personal objectives. His
maximum bonus has been retained at 100% of salary.