BT 2011 Annual Report Download - page 66

63BT GROUP PLC ANNUAL REPORT & FORM 20-F 2011
REPORT OF THE DIRECTORS
REPORT OF THE DIRECTORS THE BOARD
Governance and role of the Board
The Board, which operates as a single team, is made up of the
part-time Chairman, the Chief Executive, two other executive
directors and eight non-executive directors. All the non-executive
directors during 2011 met, and continue to meet, the criteria for
independence set out in the New Code and are therefore
considered by the Board to be independent.
Carl Symon and Nick Rose are both non-executive directors of BAE
Systems plc and the Board has determined that, as they both serve
in a non-executive capacity, they are independent for the purposes
of paragraph A.3.1. of the Code (paragraph B.1.1 of the New
Code).
The Board viewed the Chairman as independent at the time of his
appointment. The Board comprised a majority of independent non-
executive directors throughout 2011.
The Board is ultimately responsible for the management of the
group’s operations in addition to discharging certain legal
responsibilities. It has final responsibility for the group’s strategy
and for overseeing the group’s performance. Its principal focus is on:
•strategy
•development
•growing shareholder value
•oversight and control
•corporate governance.
It approves BT’s:
•values, ethics and business policies and practices
•strategic plans
•annual budget
•capital expenditure and investments budgets
•larger capital expenditure proposals
•the overall system of internal controls, governance and
compliance authorities.
The Board also oversees internal controls, operating and financial
performance and reviews the risk register. These responsibilities are
set out in a formal statement of the Board’s role which is available
at www.bt.com/board
The Board has agreed the corporate governance framework,
including giving authority to the key management committee, the
Operating Committee , to make decisions on operational and other
matters. The roles and powers of this Committee are set out below.
The Board normally meets nine times each year. The Board met 10
times during the 2011 financial year.
The roles of the Chairman and the Chief Executive are separate.
They are set out in written job descriptions, approved by the
Nominating & Governance Committee . The Chairman provides
Chairman
Executive directors
Independent non-executive
directors
Board composition
1
8
3
strong leadership for the Board on all aspects of its role. As well as
chairing the Board, the Chairman consults the non-executive
directors, particularly the Senior Independent Director, on
corporate governance issues, matters considered by the
Nominating & Governance Committee , which the Chairman chairs,
and the individual performance of the non-executive directors. The
Chairman, through the Company Secretary, ensures a full and
comprehensive induction is provided to new 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
Company Secretary, the Chairman ensures that 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 on page 60. The
Chief Executive has final executive responsibility, reporting to the
Board, for the success of the group.
The Company 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 Company Secretary is a matter for
the whole 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’s Articles of Association
include 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 & Governance 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
members of the Committee, which then recommends candidates to
the Board for appointment. This year, following this process, the
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