BT 2003 Annual Report Download - page 63

Report on directors’ remuneration
of 12 months from notice of termination or the director
obtaining full-time employment.
If the contract of an executive director is
terminated by BT within one year after BT entering into
a scheme of arrangement or becoming a subsidiary
of another company, he will be entitled to receive his
salary, the higher of that current year’s on-target
bonus or the previous year’s bonus, the market value
of shares awarded under an employee share ownership
plan or deferred bonus plan that have not vested,
together with a year’s salary and the value
of any benefits.
The Committee intends to review contracts in
the 2004 financial year taking into account the joint
statement of best practice on executive contracts and
severance, published in December 2002 by the
Association of British Insurers and the National
Association of Pension Funds, and other relevant
guidelines.
Outside appointments
The Committee believes that there are significant
benefits, 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 (of which
only one may be to the Board of a major company),
for which a director may retain the fees.
Non-executive directors’ contracts of appointment
Non-executive directors have contracts of appointment.
They are normally appointed for an initial period
of three years. During that period, either party can give
the other at least three months’ notice. At the end
of the period the appointment may be continued by
mutual agreement. Further details of their appointment
arrangements are set out on page 53 in the section
dealing with corporate governance issues.
The contracts of appointment of non-executive
directors are terminable on notice by the company
without compensation.
Non-executive directors’ remuneration
Seven of the directors on the Board are non-executive
directors who, in accordance with BT’s articles
of association, cannot individually vote on their own
remuneration. Therefore, non-executive remuneration
is set by the Chairman and the Chief Executive after
considering advice on appropriate levels
of remuneration (plus a general Board discussion).
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.
Sir Anthony Greener, Deputy Chairman and senior
non-executive director, who also chairs both
the Remuneration Committee and the Audit Committee,
is paid an inclusive annual fee of £90,000.
Non-executive directors’ fees will be reviewed during
the 2004 financial year.
To align further 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.
No element of non-executive remuneration is
performance-related. Non-executive directors do not
participate in BT’s bonus or employee share plans.
62 BT Annual Report and Form 20-F 2003