BT 2007 Annual Report Download - page 57

REPORT ON DIRECTORS’ REMUNERATION
The Report on directors’ remuneration is divided into the
following sections:
rRemuneration policy (not audited)
(i) Constitution and process
(ii) Packages and financial year 2006/07 operation
(iii) Annual package – financial year 2007/08
(iv) Other matters
Executive share ownership
Pensions
Other benefits
Service agreements
Outside appointments
Non-executive directors’ letters of appointment
Non-executive directors’ remuneration
Directors’ service agreements and contracts of
appointment
Directors’ interests
Performance graph
rRemuneration review (audited)
Directors’ emoluments
Former directors
Loans
Pensions
Share options
Share awards under long-term incentive plans
Vesting of outstanding share awards and options
Deferred Bonus Plan
Share awards under the Employee Share Investment
Plan
REMUNERATION POLICY
This part of the Report on directors’ remuneration is not
subject to audit.
(i) Constitution and process
The directors consider that BT has, throughout the year,
complied with the provisions set out in Section 1 of the 2003
Combined Code on Corporate Governance. Shareholders will be
invited to approve this report at the company’s 2007 AGM. The
Board is ultimately responsible for both the structure and
amount of executive remuneration, but it has delegated prime
responsibility for executive remuneration to the Remuneration
Committee. The Committee is made up wholly of independent
non-executive directors. The terms of reference of the
Committee are available on the company’s website at
www.bt.com/committees The Committee’s role is to set the
remuneration policy and individual remuneration packages for
the Chairman and the executive directors. The Committee also
reviews the remuneration of other senior executives reporting
to the Chief Executive. This includes approving changes to the
company’s long-term incentive plans, recommending to the
Board those plans which require shareholder approval and
overseeing their operation. In this role the Committee also
monitors the structure of reward for executives reporting to the
senior management team and determines the basis on which
awards are granted under the company’s executive share plans.
The Committee met five times during the financial year
2006/07. Sir Anthony Greener chaired the Committee from
18 July 2001 until he retired as a director on 30 September
2006. From 1 October 2006, Maarten van den Bergh has been
chairman of the Committee. Other members of the Committee
who served during the financial years 2005/06 and 2006/07
were:
rMatti Alahuhta (appointed 7 February 2006)
rLou Hughes (retired 31 March 2006)
rBaroness Jay
rDeborah Lathen (appointed 1 February 2007)
rCarl Symon.
The Chairman and Chief Executive are invited to attend
meetings. They are not present when matters affecting their
own remuneration arrangements are considered. No director
or executive is involved in any decision relating to his or her
remuneration. Non-executive directors who are not members
of the Committee are entitled to receive papers and minutes of
the Committee. The Committee had access during the year to
professional advisers, both from within the company and
externally: Kepler Associates (remuneration consultants), who
were appointed by the company; Ben Verwaayen, Chief
Executive; Hanif Lalani, Group Finance Director; Alex Wilson,
Group HR Director and Larry Stone, Company Secretary. They
provided advice that materially assisted the Committee in
relation to directors’ remuneration in the financial year 2006/07.
Remuneration consultants provide a range of data and advisory
services covering all aspects of executive pay, bonus
arrangements, shares and benefits. The Committee agreed that
Kepler Associates may advise both the Committee and BT, and
should be invited to attend meetings when major remuneration
policy issues were discussed.
BT’s policy is to reward its senior executives competitively,
taking account of the performance of individual lines of business
and the company as a whole, comparison with other FTSE 30
companies and the competitive pressures in the information and
communications technology industry. This has been crucial as
BT’s revenues from traditional business have fallen and new
Report of the Directors Corporate governance
56 BT Group plc Annual Report & Form 20-F