BT 2008 Annual Report Download - page 65

64 BT Group plc Annual Report & Form 20-F
Report on directors’ remuneration
The Report on directors’ remuneration is divided into the
following sections:
"
Remuneration policy (not audited)
(i) Role of the Remuneration Committee
(ii) Remuneration principles
(iii) Remuneration in 2007/08, 2008/09 and 2009/10
(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
"
Remuneration 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 awards
Share awards under the Employee Share Investment
Plan and Allshare International
Remuneration policy
This part of the Report on directors’ remuneration is not
subject to audit.
Shareholders will be asked to vote on this Report at
the 2008 AGM.
(i) Role of the Remuneration Committee
The Remuneration Committee, under delegated authority from
the Board, agrees the framework for the remuneration of the
Chairman, the executive directors and certain senior executives.
This includes the policy for all cash remuneration, executive
share plans, service contracts and termination arrangements. The
Committee approves changes to the executive share plans and
recommends to the Board any changes which require
shareholder approval. The Committee also determines the basis
on which awards are granted under the executive share plans to
executives reporting to the senior management team.
The Board has reviewed compliance with the Combined Code
on reward-related matters and confirms that the company has
complied with all aspects. The Chairman, Sir Michael Rake, is a
member of the Committee, in accordance with the provision of
the Combined Code permitting a company chairman to be a
member of, but not chair, the remuneration committee.
The terms of reference of the Committee are available on the
Company’s website at www.bt.com/committees
The Committee met four times during 2007/08. In addition to
the Chairman, the members of the Committee are non-executive
directors. The Deputy Chairman, Maarten van den Bergh, has
been chairman of the Committee since October 2006 and the
other members who served during 2006/07 and 2007/08 were:
"
Sir Michael Rake (appointed 26 September 2007)
"
Matti Alahuhta
"
Baroness Jay (retired 13 January 2008)
"
Deborah Lathen
"
Carl Symon
Eric Daniels was appointed as a member of the Committee on
8 May 2008.
In addition, the Chief Executive is invited to attend meetings,
except when it would be inappropriate for him to be there, for
example, when his own remuneration is discussed. Non-
executive directors who are not members of the Committee are
entitled to receive the papers discussed at meetings and the
minutes.
The Committee has received advice during the year from
independent remuneration consultants, Kepler Associates, who
were appointed by the company. Kepler advises both the
Committee and the company and attends Committee meetings
when major remuneration issues are discussed. They provide no
other services to the company. The Committee also regularly
consults the Chief Executive, the Group Finance Director, the
Group HR Director, the Director Reward and Employee Relations,
and the Secretary.
(ii) Remuneration principles
BT’s policy is to reward its senior executives competitively,
taking account of the performance of the individual lines of
business and the company as a whole, remuneration of other
FTSE 30 companies and the competitive pressures in the global
information and communications technology (ICT) industry. This
ICT comparison is increasingly important as BT’s revenues from
its traditional business have fallen and new wave services,
generated mainly from networked IT services and broadband,
have been developed to provide revenue growth.
In order to both recruit and retain key people, base salaries
are aimed to be broadly consistent with market rates with the
remuneration package as a whole (basic salary, annual bonus –
in cash and deferred shares – and the expected value of any
long-term incentives) having the potential to deliver upper
quartile rewards only for sustained and excellent performance.
A significant and increasing proportion of the total
remuneration package – bonuses and long-term incentives – is
variable and is linked to corporate performance. The
performance targets are reviewed regularly to ensure that they
are challenging.
The Committee is satisfied that the structure for the
remuneration of the senior executives does not raise
environmental, social and governance risks by inadvertently
motivating irresponsible behaviour. As members of the Board, all
Committee members receive and review an annual corporate
social responsibility report detailing the way in which the
company manages social, ethical and environmental issues. A
Board committee for responsible and sustainable business,
chaired by Sir Michael Rake, meets three or four times each
year.
Report of the Directors Corporate governance