BT 2008 Annual Report Download - page 62

BT Group plc Annual Report & Form 20-F 61
Chairman consults the non-executive directors, particularly the
Deputy Chairman, on corporate governance issues, matters
considered by the Nominating Committee, which the Chairman
chairs, and the individual performance of the non-executive
directors. The Chairman and the non-executive directors hold
regular meetings at which they discuss matters without the
executive directors being present. With the Chief Executive and
the Secretary, the Chairman ensures the Board is kept properly
informed, is consulted on all issues reserved to it and that its
decisions are made in a timely and considered way that enables
the directors to fulfil their fiduciary duties. The Chairman ensures
that the views of the shareholders are known to the Board and
considered appropriately. He represents BT in specified strategic
and Government relationships, as agreed with the Chief
Executive, and generally acts as the bridge between the Board
and the executive team, particularly on BT’s broad strategic
direction. The Chairman’s other current significant commitments
are shown in Board of Directors and Operating Committee
above. The Chief Executive has final executive responsibility,
reporting to the Board, for the success of the group.
The Secretary manages the provision of timely, accurate and
considered information to the Board for its meetings and, in
consultation with the Chairman and Chief Executive, at other
appropriate times. He recommends to the Chairman and the
Chief Executive, for Board consideration where appropriate,
corporate governance policies and practices and is responsible
for communicating and implementing them. He advises the
Board on appropriate procedures for the management of its
meetings and duties (and the meetings of the main committees),
as well as corporate governance and compliance within the
group. The appointment and removal of the Secretary is a
matter for the whole Board; for instance, the Board approved
the change of Secretary from 1 April 2008.
BT’s non-executive directors
The Nominating Committee has agreed and reviews from time to
time the combination of experience, skills and other attributes
which the non-executive directors as a whole should bring to
the Board. This profile is used by the Committee, when the
appointment of a non-executive director is being considered, to
assess the suitability of candidates. Short-listed candidates meet
the Committee, which then recommends to the Board candidates
for appointment.
The non-executive directors provide a strong, independent
element on the Board. Between them, they bring experience
and independent judgment, gained at the most senior levels of
international business operations and strategy, finance,
marketing, technology, communications and political and
international affairs.
Maarten van den Bergh, the Deputy Chairman, is the senior
independent director. In this capacity and his capacity as the
chairman of the Remuneration Committee, he meets with BT’s
major institutional shareholders. He is available to discuss
matters with these shareholders where it would be inappropriate
for those discussions to take place with either the Chairman or
the Chief Executive.
Non-executive directors are appointed initially for three years,
subject to three months’ termination notice from either BT or
the director. At the end of the first three years the appointment
may be continued by mutual agreement. Each non-executive
director is provided, upon appointment, with a letter setting out
the terms of his or her appointment, including membership of
Board committees, the fees to be paid and the time
commitment expected from the director. The letter also covers
such matters as the confidentiality of information and BT’s share
dealing code.
Main Board committees
The Operating Committee, the key management committee,
meets weekly and is chaired by the Chief Executive. The other
members are the Group Finance Director and the Chief
Executives of BT Retail, BT Wholesale and BT Global Services.
The Secretary attends all meetings and the Group HR Director
normally attends the meetings. The Committee has collective
responsibility for running the group’s business. To do that, it
develops BT’s strategy and budget for Board approval,
recommends to the Board capital expenditure and investments
budgets, monitors financial, operational and customer quality of
service performance, reviews the risk register, allocates resources
across BT within plans agreed by the Board, plans and delivers
major programmes and reviews the senior talent base and
succession plans. Within BT’s corporate governance framework,
approved by the Board, the Operating Committee can approve,
up to limits beyond which Board approval is required, capital
expenditure, disposals of fixed assets, investments and
divestments. It can delegate these approvals, up to its own
limits, to senior executives.
To meet best corporate governance practice, the Audit
Committee, the Remuneration Committee and the Nominating
Committee have long been an established part of BT’s system of
governance. Each committee has written terms of reference,
which are available on our website. The Report of the Audit
Committee, the Report of the Nominating Committee and the
Report on directors’ remuneration are on pages 62 to 77.
The Equality of Access Board (EAB) was established on
1 November 2005, as part of the Undertakings given by BT to
Ofcom following Ofcom’s strategic review of
telecommunications, to monitor, report and advise BT on BT’s
compliance with these Undertakings. The EAB is a committee of
the Board, which formally approved the formation of the EAB
and its terms of reference. As required by the Undertakings, the
EAB comprises five members: Carl Symon, a BT non-executive
director and chairman of the EAB; a BT senior executive,
Himanshu Raja, Chief Financial Officer, BT Design; and three
independent members: Sir Bryan Carsberg, Stephen Pettit and Dr
Peter Radley. The EAB reports regularly to the Board. Its terms
of reference are available on BT’s website.
The Board also has a Committee for Responsible and
Sustainable Business and a Pension Scheme Performance
Review Group.
New York Stock Exchange
BT, as a foreign issuer with American Depositary Shares listed on
the New York Stock Exchange (NYSE), is obliged to disclose any
significant ways in which its corporate governance practices
differ from the corporate governance listing standards of the
NYSE.
We have reviewed the NYSE’s listing standards and believe
that our corporate governance practices are consistent with
them, with the following exception where we do not meet the
strict requirements set out in the standards. These state that
companies must have a nominating/corporate governance
committee composed entirely of independent directors and with
written terms of reference which, in addition to identifying
individuals qualified to become board members, develops and
recommends to the Board a set of corporate governance
principles applicable to the company. We have a Nominating
Committee chaired by the Chairman, Sir Michael Rake, but this
does not develop corporate governance principles for the
Board’s approval. The Board itself approves the group’s overall
system of internal controls, governance and compliance
authorities. The Board and the Nominating Committee are made
up of a majority of independent, non-executive directors.
Report of the Directors Governance