BT 2016 Annual Report Download - page 125

Overview The Strategic Report Governance Financial statements Additional information
131
The following graph shows the vesting schedule for the TSR
element of the 2013 ISP awards.
TSR vesting schedule 2013 awards
TSR ranking position
% of share award vesting
0%
25%
50%
252015105
0
The company’s shares achieved a TSR performance of 88.9%.
This was fourth out of 24 companies during the three‑year period
and resulted in 40% (out of 40%) of the ISP award that related
to the TSR element vesting.
Normalised free cash ow
When we set the performance measures for the 2013 ISP, the
threshold for the three‑year cumulative normalised free cash ow
was set above consensus market expectations at the time, with the
upper part of the range considered to be stretching. We achieved
a three‑year cumulative normalised free cash ow outcome of
£8.1bn. This fell between the threshold and maximum targets of
£7.4bn to £8.4bn, resulting in 31.5% out of the 40% of the ISP
award that related to the cash ow element vesting.
Underlying revenue excluding transit
This measure reects the group’s aim to drive sustainable profitable
revenue growth. The measure was based on growth in underlying
revenue excluding transit measured against the baseline of
2012/13, with the threshold set as growth of 1%.
Over the three‑year period we grew underlying revenue by 2.1%,
resulting in 10.5% of the 20% of the ISP award that related to
the revenue element vesting.
Overall vesting of 2013 ISP
Performance against the TSR, normalised free cash ow and
revenue targets resulted in a 82.01% vesting of the 2013 ISP.
The number of shares due to vest in May 2016 is set out below.
An estimate of the cash value of the shares vesting is shown in
the single figure table on page 129.
Director
Vesting of
revenue
element
(£000)
Vesting
of free
cash ow
element
(£000)
Value
of TSR
element
(£000)
Total
value
of ISP
Vesting
(£000)a
ISP
Vesting
(shares)
Gavin Patterson 387 1,161 1,474 3,022 652,642
Tony Chanmugam 180 540 685 1,405 303,385
a An estimate based on the three‑month average share price from 1 January 2016 to 31 March
2016 of £4.63.
Total pension entitlements (audited)
The BT Pension Scheme (BTPS) closed to new entrants on
31 March 2001. None of the executive directors participate in
future service accrual in the BTPS; Tony Chanmugam has deferred
benefits in the BTPS. Executive directors who have been members
of the BTPS, and who retain deferred benefits in the BTPS, also
benefit from a death in service lump sum of four times salary.
All new employees are eligible to join the defined contribution BT
Retirement Saving Scheme (BTRSS). The BTRSS is a group personal
pension plan. For executive directors, the company agrees to pay
a fixed percentage of the executive’s salary each year which can
be put towards the provision of retirement benefits. Executive
directors who have never been members of the BTPS benefit from
death in service cover that would provide a lump sum of four times
salary and a dependant’s pension of 30% of capped salary.
Sir Michael Rake is not a member of any of the company pension
schemes, and the company made no payments towards retirement
provision for him. BT provides him with a lump sum death in
service benefit of £1m.
Gavin Patterson receives an annual allowance equal to 30% of
salary in lieu of pension provision as set out in the table on page
129. Gavin has previously been a member of the BTRSS but
neither he nor the company has made any contribution to the
scheme during 2015/16. BT also provides death in service cover
of a lump sum of four times his salary plus a dependant’s pension
of 30% of his capped salary.
Tony Chanmugam is not a contributing member of any of the
company pension schemes; he did not accrue any BTPS pension
over the financial year and no other contributions were made.
Further information is provided in the table below. The company
has agreed to pay him an annual amount equal to 30% of salary
in lieu of pension provision as set out in the table on page 129.
Tony has deferred payment of the BTPS benefit payable from his
60th birthday. BT provides death in service cover of a lump sum of
four times his salary which would cease if his BTPS benefits were
put into payment.
Deferred pension benets at 31 March 2016 (audited)
The table below shows Tony Chanmugam’s pension benefits at
31 March 2016. There was no pension accrued over the financial
year and no contributions were made into the pension plans.
Normal retirement age
Accrued
pension
(£000) Additional scheme lump sum (£000)
Tony Chanmugama60 248 745
a Tony Chanmugam’s contributions in 2015/16 were £nil (2014/15: £nil). Figures represent
total benefits accrued across two BT pension schemes. Tony is beyond the pension plans’ normal
retirement age and is not drawing a pension.