BT 2016 Annual Report Download - page 124

BT Group plc
Annual Report 2016
130
The weighting of the annual bonus structure is set out below.
20%
Adjusted earnings per share
25%
Customer service Personal contribution
20%
20%
Normalised
free cash ow
15%
Revenue growth
Chief Executive and Group Finance Director
% Weighting
The table below provides an overview of performance against the
targets for the 2015/16 annual bonus.
Measure Threshold Target Maximum Outcome
Result %
of max
Adjusted EPS (p)a30 31.6 34 33.5 89.3%
Normalised free cash
ow (£m)b2,712 2,855 3,069 2,827 46.8%
Revenue (£m)c17,506 17,683 17,948 17,522 27.3%
a Adjusted EPS is defined on page 97.
b Normalised free cash ow is defined on page 97.
c Revenue is defined on page 97.
Bonus outcomes were based on BT standalone performance during
the year. BT continued to make progress during the year, delivering
on both our business and financial plans as shown in the table
above.
Two-thirds of the customer service measure is based on Right First
Time (RFT) and one-third on the customer perception measure.
We did not meet threshold against stretching customer service
targets and therefore no bonus was paid for this element. You can
find more information on RFT on page 22.
The Chairman assessed the Chief Executive, and the Chief
Executive assessed the Group Finance Director, on personal
contribution targets and performance against personal objectives.
These assessments were based on a number of factors including
BT’s regular employee surveys, organisational health, culture
and performance against personal objectives set at the start of
the year.
The Chief Executive achieved 70% of maximum for his personal
contribution score. The personal contribution score reected
leadership in key strategic areas including the acquisition of EE
and the subsequent restructuring of the organisation.
The Group Finance Director achieved 60% of the maximum
score for his personal contribution. The result for the personal
contribution score was for delivering against our cost
transformation and operational eciency objectives.
For both the Chief Executive and Group Finance Director, bonus
is delivered in both cash (two-thirds) and deferred shares (one
third). Once granted, deferred shares are not subject to any
further performance conditions, and will normally be transferred
to participants at the end of the three-year deferred period if the
participant is still employed by BT.
Gavin Patterson’s annual bonus, paid both in cash and deferred
shares represented 109% of salary (2014/15: 139%) and 45%
of the maximum bonus opportunity (2014/15: 58%).
Tony Chanmugam’s annual bonus, paid both in cash and deferred
shares represented 91% of his salary (2014/15: 113%) and 43%
of the maximum opportunity (2014/15: 54%).
The deferred shares will be granted in June 2016.
Bonus award and proportion of value
Element of bonus
Gavin
Patterson
Tony
Chanmugam
Adjusted EPS 39.40%41.22%
Normalised free cash ow 20.64%21.59%
Revenue growth 9.05%9.47%
Customer service 0% 0%
Personal contribution 30.91%27.71%
Incentive share plan 2013
The ISP is a conditional share award. The awards granted in 2013
vest in May 2016. The performance conditions are based 40%
on relative TSR, 40% on normalised free cash ow, and 20% on
growth in underlying revenue excluding transit over a three-year
performance period.
The performance outcome for the 2013 ISP is measured on
the basis of standalone BT performance and excludes any
EE contribution.
TSR
The TSR element is measured against a comparator group
containing other telecommunications companies and companies
which are of a similar size or market capitalisation, have a similar
business mix and spread as BT or operate in comparable markets.
BT’s TSR comparator group for the 2013 ISP comprised the
following companies:
• Accenture
• AT & T
• Belgacom
• Cap Gemini
• Centrica
• Deutsche Telekom
• France Telecom
• Hellenic Telecom
• IBM
• National Grid
• Pharol (formerly
Portugal Telecom)
• Royal KPN
• Sky
• Swisscom
• TalkTalk
• Telecom Italia
• Telefónica
• Telekom Austria
• Telenor
• TeliaSonera
• Verizon
• Virgin Media
• Vodafone
The TSR for a company is calculated by comparing the return index
(RI) at the beginning of the performance period with the RI at the
end of the period. The RI is the TSR value of a company measured
on a daily basis, as tracked by independent analysts, Datastream.
It uses the ocial closing price for a company’s shares, adjusted for
all capital actions and dividends paid. The initial RI is determined by
calculating the average RI value taken daily over the three months
prior to the beginning of the performance period; and the end
value is determined by calculating the average RI over the three
months up to the end of the performance period. This mitigates
the eects of share price volatility. A positive change between
the initial and final values indicates growth in TSR.