BT 2016 Annual Report Download - page 117

Overview The Strategic Report Governance Financial statements Additional information
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As part of our acquisition of EE, Deutsche Telekom (DT) is entitled
to nominate an individual to be appointed as a non-independent,
non‑executive director of BT. We considered DT’s nomination of Tim
Höttges as the DT representative to the Board and recommended
to the Chairman that he approve this nomination. Tim brings
relevant experience in mobile, financial control, corporate planning,
and mergers and acquisitions.
The appointments of Mike Inglis and Tim Höttges particularly
strengthen our industry specific knowledge and we believe the
Board has strong expertise in all areas of our skills matrix. We
agreed that the size and composition of the Board in light of the EE
transaction was appropriate and did not require a refresh. We will
keep this under review.
As well as the new appointments to the Board, we recommended
that Tony Ball’s appointment as an independent non-executive
director be extended by a further three‑year term from 16 July
2015. This recommendation followed a thorough evaluation of
Tony’s performance, in line with the UK Corporate Governance Code
statement that any term beyond six years for a non-executive
director should be subject to a particularly rigorous review.
Tony brings international business expertise, in addition to financial,
operational, sales and marketing experience. Having held a number
of senior executive positions in broadcasting and telecoms
businesses, he has strong industry specific knowledge, and makes a
valuable and long-ranging contribution to the Board and the
committees of which he is a member.
We reviewed Tony’s other roles, and we do not believe that these
prevent Tony from making a full contribution as a BT Group plc
independent non-executive director. We were able to assure
ourselves that Tony continues to be independent in character and
judgement and that there are no conicts of interest that could
aect his judgement.
All non-executive appointments can be terminated on three
months’ notice and are subject to automatic termination in the
event of a director not being elected or re‑elected by shareholders
at the AGM.
In December, the committee supported the Chief Executive
entering into further discussions with Simon Lowth, as successor to
the Group Finance Director. Simon is one of the UK’s most
respected CFOs, known for driving cost transformation and
performance improvement programmes. I look forward to Simon
joining us in July 2016.
We also discussed succession plans for the Operating Committee ,
and the appointment of five senior executives from EE.
Governance structure and eectiveness
We keep our membership of BT’s Board committees and
governance structure under constant review.
Following the establishment of the
Technology Committee in
November 2014, we recommended a change to the terms of
reference to the Board. We recommended that there should be no
stipulated minimum number of members, but that the quorum of
two members should be retained, and should include at least one
non‑executive member. The Board approved the change to the
terms of reference in June 2015.
After reviewing our Board committees’ membership, we
recommended:
• Isabel Hudson should join the
Nominating & Governance
Committee
with eect from 1 August 2015; and
• Gunhild Stordalen should join the Committee for Sustainable and
Responsible Business
as an independent member, with eect
from 1 January 2016.
We reviewed the proposed governance arrangements to be put in
place from the completion of the EE acquisition, and recommended
that the Board approve a new Reserved Power in relation to related
party transactions between BT and Deutsche Telekom.
Subject to completion of the EE acquisition we recommended that
the Board approve the terms of reference and appoint the
proposed members and chairs of the
Integration Committee and
the Conicted Matters Committee .
Governance programmes
This year, we discussed a review of BT’s governance operating
model and framework, recent improvements to the Delegation
of Authority framework, a project to clarify our governance and
compliance roles outside the UK, and external governance
developments on Board diversity and succession planning.
The aim of reviewing our governance framework is to ensure that
governance in BT is clear and simple, to align with our culture and
purpose. The review is ongoing; in December we endorsed the
proposed next steps, and discussed the proposal to amend the
terms of reference of our Regional Governance Committees to
expand their oversight of risk. We asked the Chief Executive, Group
Finance Director and Group General Counsel & Company Secretary
to decide if this was appropriate and if so, gave them the authority
to amend the terms of reference and seek endorsement from the
Operating Committee .
In BT’s non‑UK operations, we have clarified our country managers’
accountability for a common set of governance and compliance
standards, and put in place a formal process to appoint new
country managers. As a result, country managers are reporting a
better understanding of their obligations. We are now focusing on
how to embed the principles into how we work, assessing the
capabilities and development needs of country managers, and
providing appropriate assurance to the
Operating Committee .