BT 2014 Annual Report Download - page 104

101
Governance
Governance
Comparison of Chief Executive remuneration
to Total Shareholder Return
This graph illustrates the performance of BT Group plc measured by TSR
relative to a broad equity market index over the past ve years. We consider
the FTSE100 to be the most appropriate index against which to measure
performance, as BT has been a constituent of the FTSE100 throughout the
ve-year period, and the index is widely used. TSR is the measure of the
returns that a company has provided for its shareholders, reecting share
price movements and assuming reinvestment of dividends.
50
100
150
350
250
300
200
500
550
600
400
450
650
%
BT FTSE100
2008/09
2009/10
2010/11 2011/12 2012/13 2013/14
Source: Datastream
The graph shows the relative TSR performance
of BT and the FTSE100 over the past Ƭve years.
BT’s TSR performance vs the FTSE100
History of Chief Executive remuneration
Year end Chief Executive
Total Rem
£000
Annual bonus
(of max)
ISP vesting
(of max)
2014aGavin Patterson £2,901 62% 78.7%
Ian Livingston £4,236 35% 63.4%
2013 Ian Livingston £9,402 65% 100%
2012 Ian Livingston £8,520 73% 100%
2011 Ian Livingston £4,009 79% 0%
2010 Ian Livingston £3,556 71% 0%
a Ian /ivingston stepped down on 10 September 2013 and Gavin Patterson took over from that
date.
Percentage change in Chief Executive remuneration
(comparing 2012/13 to 2013/14)
The table below illustrates the increase in salary, benets and annual
bonus for the Chief Executive and that of a representative group of the
company’s employees.
For these purposes, we have used the UK management and technical
employee population representing around 23,000 people because they
also participate in performance related pay arrangements on a similar
basis as executive directors.
Salary BenetsbBonusc
% Change in Chief Executive remunerationa0% 31% –9%
% Change in comparator groupd3.1% 0% 29.7%
a Represents the change for the role of Chief Executive during the period. Ian /ivingston was Chief
Executive until 10 September 2013 when he stepped down and Gavin Patterson was appointed.
The Chief Executive package at on target remuneration was reduced by around 20% on change of
incumbent representing around £0.8m.
b The increase in beneƬts for the Chief Executive was £8,704.
c The bonus comparator is based on cash bonus only to give a better like for like comparison. A
combination of cash and deferred bonus would indicate a reduction of 43%.
d Comparator group is the 8. management and technical employee population representing around
23,000 individuals.
Relative importance of spend on pay
The table below illustrates the change in total remuneration and
dividends and share buy-back paid.
Area 2013/14 (£m) 2012/13 (£m) % Change
Remuneration paid to all
employees 4,703 4,785 -1.7
Dividends/share buybacks 1,083 986 9.8
Implementation of Remuneration Policy in 2014/15
Base salary
The committee continues to position salaries towards the lower
end of market practice for our comparator companies. Comparator
company information is provided by Deloitte, independent advisor to
the committee, and consists of companies of a similar sie or market
capitalisation and/or have a similar business mix and spread as BT or
operate in comparable markets.
Gavin Patterson will receive a salary increase to £950,000 per annum
eective June 2014, an increase of 2.7%, in line with the mid-range of
pay awards for our managerial and technical specialist population.
The committee has re-balanced the remuneration package for Tony
Chanmugam, reducing annual bonus opportunity, while placing more
emphasis on long-term reward via the ISP. As part of the re-balancing,
and following the 2014/15 salary review, Tony’s salary will increase to
£630,000 per annum eective June 2014, representing an increase of
5%, which reects his continued strong performance, and importance
to the company given the new Chief Executive. Tonys salary remains
positioned below mid-market, in line with our policy.
Benets
The committee intends to set benets in line with the policy set out
onpage 104. There are no changes proposed to the benet framework
for 2014/15.
Pension
Current levels of pension provision for 2014/15 are the same as for
2013/14. Executive directors receive an annual amount equal to 30%
of salary in lieu of pension provision.