BT 2004 Annual Report Download - page 63

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 has reviewed contracts 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, and believes contract terms
are generally in line with best practice. The clause
dealing with termination following BT entering into a
scheme of arrangement or becoming a subsidiary of
another company will be reviewed for future
appointments and in any contract renegotiations.
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. Pierre Danon
receives fees of £35,000 per year as a non-executive
director of Emap plc and Ian Livingston fees of
£35,000 per year as a non-executive director of Hilton
Group plc. Pierre Danon has resigned from the Board
of Hays plc where he received fees of £45,000 per
year.
Non-executive directors’ letters of appointment
Non-executive directors have letters of appointment.
They are 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 appointment
arrangements for non-executive directors are set out
on page 53 in the section dealing with corporate
governance issues.
The letters 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. Non-executive remuneration is reviewed
by the Chairman and the Chief Executive and discussed
and agreed by the Board. Non-executive directors may
attend the Board discussion but may not participate
in it.
The fees paid to non-executive directors were
increased with effect from 1 January 2004 to reflect
their increasing responsibilities and time
commitments. Non-executive directors’ fees were last
changed five years ago, on 1 January 1999.
The basic fee for non-executive directors is
£40,000 per year. An additional fee for membership of
Board committees is £5,000 per year, other than for
the Pensions Performance Review Group for which no
fee is paid. Sir Anthony Greener, Deputy Chairman and
senior non-executive director, who also chairs both the
Remuneration Committee and the Audit Committee,
receives total fees of £115,000 per 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 and
are not members of any of the company pension
schemes.
BT Annual Report and Form 20-F 200462 Report on directors’ remuneration