BT 2016 Annual Report Download - page 132

BT Group plc
Annual Report 2016
138
The target ranges for the normalised free cash ow and underlying
revenue growth excluding transit revenue are set out below:
Measure
2016/17–2018/19 Threshold Level of vesting Maximum Level of vestinga
Normalised free
cash owb£10.7bn 25% £11.7bn 100%
Revenue growthc2.1%25% 7.6%100%
a Vesting level between threshold and maximum will be on a straight line basis.
b Normalised free cash ow is defined on page 97.
c Growth in underlying revenue excluding transit is defined on page 97.
The committee continues to believe that the free cash ow and
revenue performance measures are challenging, and the financial
performance necessary to achieve awards towards each target is
stretching.
Adjustment of performance measures for outstanding
ISP awards
Following completion of the EE acquisition in January 2016, the
committee considered whether the previously set performance
measures for the 2014 and 2015 ISP awards remained
appropriate. Under the rules of the ISP, the committee agreed to
adjust the performance measures to reect the enlarged group as
set out in the table below.
Measure
2014/15–2017/18 Threshold Level of vesting Maximum Level of vesting
Normalised free
cash ow
Original £8.15bn 25% £9.15bn 100%
Revised £8.67bn 25% £9.67bn 100%
Revenue growth
Original 3.5% 25% 6% 100%
Revised 2.35% 25% 5.35% 100%
Measure
2015/16–2018/19 Threshold Level of vesting Maximum Level of vesting
Normalised free
cash ow
Original £8.6bn 25% £9.6bn 100%
Revised £10.25bn 25% £11.25bn 100%
Revenue growth
Original 6.5% 25% 9% 100%
Revised 5.79% 25% 8.3% 100%
The revenue growth measure is based on growth in underlying
revenue excluding transit, the impact of acquisitions and disposals
and foreign exchange movements. So whilst the absolute value
of revenue is targeted to increase significantly between 2015/16
and 2017/18, to maintain the principle of an underlying measure,
the base year for revenue growth has been adjusted to include
the actual performance of EE during this period, even though
EE was not part of BT at the time. The movement in the range
represents the relative growth opportunity from the acquisition
of EE including revenue synergies and the impact of additional
regulation and elimination of internal trading. This provides a fair
target measure of performance and is considered to be no more or
less dicult to achieve.
Chairman and non-executive director
remuneration
The fees for non-executive directors, and for the Chairman, were
reviewed during the year. The last review of non-executive director
fees was in January 2015. In accordance with the Articles of
Association, the Chairman and executive directors conducted the
review, and considered the role and requirements of BT, together
with the fees paid to non-executive directors at companies of a
similar size and complexity. Company comparator information was
provided by Deloitte, independent advisers to the committee,
using the same comparator group of companies as for executive
remuneration. Following the review, the basic fee for a non-
executive director was increased to £72,000 per year (from
£70,000) from 1 January 2016. The Chairman’s fee was reviewed
by the committee (of which he is not a member) and it was agreed
no increase should be applied.
The fees for membership of, or chairing, a committee were also
reviewed and are reected in the following table.
2015/16 fee 2014/15 fee
Audit & Risk Committee member £25,000 £20,000
Audit & Risk Committee chair £35,000 £30,000
Nominating & Governance
Committee member £10,000 £7,500
Nominating & Governance
Committee chair n/aan/aa
Pensions Committee member £10,000 £7,500
Pensions Committee chair £25,000 £15,000
Committee for Sustainable &
Responsible Business member £5,000b£5,000b
Committee for Sustainable &
Responsible Business chair n/aan/aa
Technology Committee member £14,000 £5,000
Technology Committee chair n/aan/aa
Remuneration Committee member £15,000 £15,000
Remuneration Committee chair £28,000 £25,000
Equality of Access Board member n/a n/a
Equality of Access Board chair £72,500 £72,500
a Where the Chairman or Chief Executive acts as Chair of a Board committee, no additional
committee chair fee is payable.
b External members of the CSRB receive a fee of £10,000 a year.
The Senior Independent Director receives an additional fee of
£27,000 for that position.
An additional fee of £2,000 per trip is paid to those non‑executive
directors travelling on an inter-continental basis to Board and
Board Committee Meetings.
No element of non-executive director remuneration is
performance-related. Non-executive directors do not participate in
BT’s bonus or employee share plans and are not members of any of
the company pension schemes.