BT 2002 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 we have 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.
The Board is currently made up of the part-time
Chairman, ®ve executive directors and six non-executive
directors. It is BT's stated policy to appoint a further non-
executive director to retain a majority of independent non-
executive directors. All the non-executives are independent.
Between them, the non-executive directors bring
experience and independent judgement at a senior level of
international business operations and strategy, marketing,
communications, and political and international affairs.
The non-executive directors provide a strong
independent element on the Board. Sir Anthony Greener,
the Deputy Chairman, is the senior independent member.
However, the Board operates as a single team.
Non-executive directors are appointed initially for three
years. At the end of that period, the appointment may be
continued by mutual agreement.
All directors are required by the company's articles of
association to be elected by shareholders at the ®rst AGM
after their appointment, if appointed by the Board. A
director must also retire by rotation and may seek
re-election at the AGM if he or she was last elected or
re-elected at or before the AGM held in the third year before
the year in question.
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 69.
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 removal of whom is a matter for the whole
Board. He advises 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 Operating Committee and other key
senior executives. Throughout their period in of®ce they are
updated on BT's business, the competitive and regulatory
environments in which it operates, social and environmental
matters 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, Ben Verwaayen, chairs the Operating
Committee. The other members are the Group Finance
Director and the Chief Executives of BT Ignite,
BTopenworld, BT Wholesale and BT Retail. The Secretary
attends its meetings. The Committee has collective
responsibility for running the group's business end-to-end.
To do that, it develops the group's strategy and budget for
agreement by the Board, recommends to the Board the
group's capital expenditure and inorganic investments
budgets, monitors the ®nancial, operational and customer
quality of service performance of the whole group, allocates
resources across the group within plans agreed by the
Board, plans and delivers major cross-business
programmes and reviews the senior talent base and
succession plans of the group.
A sub-committee of the Operating Committee, the
Management Council, meets monthly. It consists of the
Operating Committee members plus a number of other
senior executives. It is an advisory forum supporting the
Chief Executive in policy formulation, on issues such as
corporate social responsibility, technology, public policy and
reputation, industrial relations and employment policies.
The Nominating Committee, consisting of the
Chairman, the Deputy Chairman and two other
non-executive directors, recommends to the Board
appointments of all directors. To ensure an appropriate
balance of expertise and ability, it has agreed, and regularly
reviews, a pro®le of the skills and attributes required from
the non-executive directors as a whole. This pro®le is used
to assess the suitability as non-executive directors of
candidates put forward by the directors and outside
consultants. Candidates short-listed for appointment are
52 BT Group Annual Report and Form 20-F 2002