BT 2010 Annual Report Download - page 63

61BT GROUP PLC ANNUAL REPORT & FORM 20-F
ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS REVIEW OF THE YEAR OVERVIEW
REPORT OF THE DIRECTORS THE BOARD
Directors’ powers to authorise conflicts
of interest
All directors have a duty under the Companies Act 2006 (the ‘2006
Act’) to avoid a situation in which he or she has or can have a direct
or indirect interest that conflicts or possibly may conflict with the
interests of the company. The company adopted new Articles of
Association in July 2009 which included provisions for dealing with
directors’ conflicts of interest in accordance with the 2006 Act. The
Company has procedures in place, which it follows, to deal with
situations where directors may have any such conflicts, which
require the Board to:
consider each conflict situation separately on its particular facts
consider the conflict situation in conjunction with the rest of
their duties under the 2006 Act
keep records and Board minutes as to authorisations granted by
directors and the scope of any approvals given
regularly review conflict authorisation.
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 judgement, gained at the most senior levels of
international business operations and strategy, finance, marketing,
technology, communications and political and international affairs.
In her capacity as the Senior Independent Director, and as the
chairman of the
Remuneration Committee , Patricia Hewitt meets
from time to time with BT’s major institutional shareholders. She is
able, if necessary, 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 Committe e, 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, BT Global Services, BT Innovate & Design and
BT Operate. The Company 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 and individual risks
on it, 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 sub-committees and 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 Report of the
Committee for responsible and sustainable business is included on
page 65.
The Equality of Access Board (EAB), which is also a
committee of the Board, was established, 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. 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 Innovate &
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
EAB publishes an annual report to Ofcom, which is also available on
BT’s website.
The Board also has a
Pension Scheme Performance Review
Group
, which reviews the position of the BTPS and issues affecting
its ongoing funding.
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.
The Sarbanes-Oxley Act of 2002, the US Securities and Exchange
Commission (SEC) and NYSE introduced rules on 31 July 2005
requiring us to comply with certain provisions relating to the
Audit
Committee
. These include the independence of Audit Committee
members and procedures for the treatment of complaints regarding
accounting or auditing matters. We are fully compliant with these
requirements.