BT 2014 Annual Report Download - page 115

112 Governance
Directors’ and oƯcers’ liability insurance and indemnity
For some years, BT has purchased insurance to cover the directors,
ocers and employees in positions of managerial supervision of BT
Group plc and its subsidiaries against defence costs, civil damages and,
insome circumstances, civil nes and penalties following an action
brought against them in their personal capacity. The policy also covers
such individuals whilst serving at the company’s request as directors
ofother companies or of joint ventures or on the boards of trade
associations or charitable organisations. The insurance operates to
protect the directors and ocers directly in circumstances where,
bylaw,BT cannot provide an indemnity and also provides BT, subject to a
retention, with cover against the cost of indemnifying a director or ocer.
One layer of insurance is ring-fenced for the directors of BT Group plc.
Asat 7May 2014, and throughout 2013/14, the company’s
wholly-owned subsidiary, British Telecommunications plc, has provided
an indemnity in respect of a similar group of people who would be covered
by the above insurance. Neither the insurance nor the indemnity provides
cover where the person has acted fraudulently or dishonestly.
Interest of management in certain transactions
During and at the end of 2013/14, none of BT’s directors was materially
interested in any material transaction in relation to the group’s business
and none is materially interested in any presently proposed material
transactions.
Power to authorise conƮicts
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 conicts, or possibly may conict, with the interests of the
company. The company’s Articles of Association include provisions for
dealing with directors’ conicts 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 conicts, which require
theBoard to
• consider each conict situation separately on its particular facts
• consider the conict situation in conjunction with the rest of its duties
under the 2006 Act
• keep records and Board minutes as to authorisations granted by
directors and the scope of any approvals given and
• regularly review conict authorisation.
General information
US Regulation
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 signicant ways
in which its corporate governance practices dier 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 qualied to become board members,
develops and recommends to the Board a set of corporate governance
principles applicable to the company. We have a
Nominating &
Governance Committee
whose terms of reference include governance
and compliance issues (see Nominating & Governance Committee
Chairman’s report on page 86). The
Nominating & Governance
Committee’
s terms of reference are in line with the requirements
set outin the standards. However, the committee is chaired by the
Chairman, Sir Michael Rake, who is not considered independent
under the NYSE’s listing standards. The Board and the
Nominating
& Governance Committee
are made up of a majority of independent,
non-executive directors.
The US Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley Act), the US
Securities and Exchange Commission (SEC) and NYSE listing standards
require companies to comply with certain provisions relating to their
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.
US Sarbanes-Oxley Act of 2002
BT has securities registered with the SEC. As a result, we must comply
with those provisions of the Sarbanes-Oxley Act applicable to foreign
issuers. We comply with the legal and regulatory requirements
introduced pursuant to this legislation, in so far as they are applicable.
The
Audit & Risk Committee includes Nick Rose who, in the opinion of
the Board, is an audit committee nancial expert’ and is independent
(as dened for this purpose). The Board considers that the committee’s
members have broad commercial knowledge and extensive business
leadership experience, having held between them various prior roles
in major business, nancial management, and nancial function
supervision and that this constitutes a broad and suitable mix of
businessand nancial experience on the committee.
<ou can view the code of ethics adopted for the purposes of the
Sarbanes-Oxley Act at www.bt.comethics
The code of ethics adopted for the purposes of the Sarbanes-Oxley
Actapplies to the Chief Executive, Group Finance Director and senior
nance managers.