BT 2009 Annual Report Download - page 63

ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS BUSINESS AND FINANCIAL REVIEWS OVERVIEW
REPORT OF THE DIRECTORS
61BT GROUP PLC ANNUAL REPORT & FORM 20-F
REPORT OF THE DIRECTORS REPORT ON DIRECTORS’ REMUNERATION
benefits. Additionally, a lump sum benefit equal to four times salary
is payable on death in service. Gavin Patterson is the only executive
director who is a member of the BTRP. The BTRP was closed to
future contributions and new members from 31 March 2009 and
was replaced by the BT Retirement Saving Scheme, which is a group
personal pension plan.
Pension provision for all executives is based on salary alone –
bonuses, other elements of pay and long-term incentives are
excluded.
Other benefits
Other benefits for the Chairman and the senior management team
include some or all of the following: company car, fuel or driver,
personal telecommunications facilities and home security, medical
and dental cover for the director and immediate family, special life
cover, professional subscriptions, and personal tax planning and
financial counselling. The company has a permanent health
insurance policy to provide cover for the Chairman and certain
executive directors who may become permanently incapacitated.
Directors who have left the Board
Ben Verwaayen stepped down as Chief Executive on 31 May 2008
and resigned as a director on 30 June 2008. He received a
termination payment of £700,000, equivalent to 10.5 months’
salary, in accordance with the terms of his contract and a bonus of
£300,000 for his contribution in 2008/09 prior to leaving the
Board. His awards over a total of 859,188 shares under the ISP
lapsed on 30 June 2008. His awards over a total of 1,946,366
shares under the DBP vested on 30 June 2008.
François Barrault resigned as Chief Executive, BT Global Services
and as a director on 30 October 2008. He left the company on
30 November 2008.
He received a termination payment of €1,933,435 (£1,598,805)
in accordance with the terms of his contract. This consisted of the
equivalent of 12 months’ salary and benefits as defined in his
contract; this amount was delivered in a series of phased payments.
Further details are given in the Directors’ emoluments table on
page 64.
His award under the RSP was pro-rated so that awards over a
total of 119,966 shares vested on 10 December 2008; the
remaining 59,984 shares lapsed. His 2006 and 2007 awards under
the DBP were pro-rated so that 116,381 shares vested and 57,830
shares lapsed. All of his 2008 award under the DBP over 167,987
shares lapsed. All of his awards over a total of 1,286,713 shares
under the ISP lapsed when he left the company. In respect of the
above share plans, of a total of 1,808,861 shares, 236,347 (13%)
vested and 1,572,514 shares (87%) lapsed.
An option over 362,500 shares which had been granted to
François Barrault under the GSOP in 2004 was preserved so that it
would be exercisable for 12 months from the date on which he left
the company.
Full details of the share awards and options held by Ben
Verwaayen and François Barrault are given in the tables on pages
66 to 69.
Service agreements
It is the policy for the Chairman and executive directors to have
service agreements providing for one year’s notice. It may be
necessary on recruitment to offer longer initial periods to new
directors from outside BT, or circumstances may make it appropriate
to offer a longer fixed term. All of the service agreements contain
provisions dealing with the removal of a director for poor
performance, including in the event of early termination of the
contract by BT. The contracts of the Chairman, Ian Livingston,
Tony Chanmugam, Hanif Lalani and Gavin Patterson entitle them on
termination of their contract by BT to payment of salary and the
value of benefits until the earlier of 12 months from notice of
termination or the director obtaining full-time employment. No
director will receive a bonus or other payments on a change of
control.
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. Ian Livingston receives an annual fee
of £25,000 as a non-executive director of Celtic plc and an
additional annual fee of £5,000 for chairing the audit committee.
Gavin Patterson was a non-executive director of Johnston Press
from 7 July 2008 until 24 April 2009, for which he received a fee at
the rate of £40,000 per annum. Ben Verwaayen, who resigned as a
director on 30 June 2008, as a non-executive director of United
Parcel Service (UPS), received an annual fee of US$75,000 and a
US$110,000 restricted stock award. François Barrault, who
resigned as a director on 30 October 2008, received an annual fee
of €38,483 (£30,674) as a director of eServGlobal in Australia.
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 in Governance and role of the
Board on page 52. The letters of appointment of non-executive
directors are terminable on notice by the company without
compensation.
Non-executive directors’ remuneration
Eight 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 most recent review by the Board of the fees for the
non-executive directors was in January 2008, having not
previously been reviewed since 2004.
The basic fee for non-executive directors is £60,000 per year.
There is an additional fee for membership of a Board committee of
£5,000 per year and a further £5,000 for chairing a committee, with
the exception of the
Audit Committee , for which the membership fee
is £10,000 and the additional chairmanship fee is £15,000.
Furthermore, the membership fee for the
Remuneration
Committee
is £10,000 and the additional chairmanship fee is
£10,000. Maarten van den Bergh, as Deputy Chairman and senior
independent director, chairman of the
Remuneration Committee
and chairman of the Pension Scheme Performance Review
Group
, receives total fees of £150,000 per year. Carl Symon
receives an annual fee of £70,000 as chairman of the
Equality of
Access Board
(a Board committee), which was established on
1 November 2005.
An additional fee of £2,000 per trip is paid to those
non-executive directors travelling regularly from overseas to Board
meetings on an inter-continental basis.
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