BT 2014 Annual Report Download - page 111

108 Governance
(subject to the committee’s discretion to determine the appropriate level
of vesting, having regard to such relevant factors as it decides to take into
account). If the acquiring company oers to exchange awards over BT
shares for awards over its shares (or shares in another company), awards will
normally be exchanged and continue under the rules of the relevant plan.
If within 12 months of a change of control, a participants employment
is terminated by his employer other than for misconduct or performance
or he or she resigned as a result of a reduction of his or her duties or
responsibilities constituting a material breach of the individuals contract,
the participant is entitled to receive an amount equal to the dierence
between the value he or she received on the change of control he would
have received if the relevant performance condition had been met in full.
In the event of a voluntary winding up of the company, awards may
vest on the members’ resolution to voluntarily wind-up the company
being passed.
Employment conditions elsewhere in the group
The committee considers the pay and conditions of employees
throughout the company when determining the remuneration
arrangements for executive directors although no direct comparison
metrics are applied.
In particular, the committee considers the relationship between general
changes to UK employees’ remuneration and executive director reward.
Whilst the committee does not directly consult with our employees as
part of the process of determining executive pay, the Board does receive
feedback from employee surveys that takes into account remuneration in
general. The committee also receives updates from the Group
People Director.
Executive director and Chairman service contracts
The other key terms of the service contracts for the current executive
directors and the Chairman are set out below.
The termination provisions described above are without prejudice to BT’s
ability in appropriate circumstances to terminate in breach of the notice
period referred to above, and thereby be liable for damages to
the executive director or Chairman.
In the event of termination by BT, each executive director and the
Chairman may have entitlement to compensation in respect of his or her
statutory rights under employment protection legislation in the UK.
Where appropriate, BT may also meet a director’s reasonable legal
expenses in connection with either his appointment or termination
of his appointment.
There are no other service agreements, letters of appointment or
material contracts, existing or proposed, between the company and any
of the executive directors
Illustration of executive director pay scenarios
Our remuneration policy aims to ensure that a signicant proportion of
pay is dependent on the achievement of stretching performance targets.
The committee has considered the level of total remuneration that would
be payable under dierent performance scenarios and is satised that,
as the graph below illustrates, executive pay is appropriate in the context
of the performance required and is aligned with shareholders’ interests.
The illustrative scenarios below set out the total remuneration that
might be received by each executive director for dierent levels of
performance, based on our remuneration policy.
The minimum reects base salary, pension and benets only which are
not performance related.
Performance Assumptions
Fixed pay All scenarios • Consists of total xed pay – base
salary, benets and pension
– Base salary – salary eective as
at June 2014
– Benets – amount received by
each director in 2013/14
– Pension – cash supplement in
lieu of pension provision for
2014/15
Variable
pay
Minimum • No payout under the annual bonus
• No vesting under the ISP
On-target • 50% of the maximum payout
under the annual bonus
• 25% of maximum vesting under
the ISP
Maximum • 100% of the maximum payout
under the annual bonus
• 100% of maximum vesting under
the ISP
For these purposes, we have assumed a usual maximum ISP award of 400% of base salary
for the CEO and 280% of base salary for the GFD. The absolute maximum ISP award under
our remuneration policy is 500% of base salary.
For the GFD, we have also assumed a maximum bonus opportunity of 210% of salary.
Provision Policy
Notice period • 12 months’ notice by the company, six months’ notice by the executive director or Chairman
(there is no xed expiry date).
Termination payment • In lieu of giving an executive director or the Chairman 12 months’ notice, BT may terminate the director’s
contract and make a payment in lieu of salary to which the director was entitled if he or she had received
notice and the value of contractual benets for the period.
• In respect of the executive directors, the payments in lieu will be payable in equal monthly instalments until
the date on which the notice period would have expired or (if earlier) the date on which the director secures
alternate employment with the same or higher basic salary or fee. In the event that the director secures
alternate employment at a basic salary of £30,000 or higher, but lower than their salary, payment in lieu will
be reduced by the amount of the new lower salary received. The Board retains the right to lower the payment
in lieu of the directors new employment if it considers the new employment terms of the director are not
appropriately balanced between basic salary and other elements, and may cease making payments entirely
where the Board is not satised the director is making reasonable eorts to secure alternative employment.
• In respect of the Chairman, the payment in lieu will be payable in equal monthly instalments until the earlier of
12 months from the date of termination or the date the Chairman secures alternate full-time employment.
Remuneration and beneƬts • Participation in the incentive plans ISP, DBP and annual bonus, saveshare and directshare, is non-contractual.
The Chairman does not participate in the ISP, DBP or any annual bonus.
• Other benets include pension (including life cover), dental cover, car, private health care (including spouse
and children under age of 18 or 21 if in full time education), telecommunication facilities, home security and
professional subscriptions. The Chairman does not receive pension benets but is entitled to all other benets.
• The Chairman receives an all-inclusive fee for the role.