BT 2016 Annual Report Download - page 139

Overview The Strategic Report Governance Financial statements Additional information
145
Remuneration arrangements throughout the
company
BT operates in a number of dierent environments and has many
employees who carry out diverse jobs across a number of countries:
• all employees, including directors, are paid by reference to the
market rate;
• performance for managers is measured and rewarded through
a number of performance-related bonus schemes across the
group;
• business unit performance measures are cascaded down through
the organisation;
• BT oers employment conditions that reect our values and are
commensurate with a large publicly listed company, including
high standards of health and safety and equal opportunities;
• BT operates all employee share plans in many countries. These
are open to all employees where oered; and
• BT oers a range of employee benefits many of which are
available to everyone.
Recruitment
Our recruitment policy is based on a number of key principles:
• we aim to provide a remuneration package which is sucient to
attract, retain and motivate key talent, while at all times ensuring
that we pay no more than is necessary, with due regard to the
best interests of the company and our shareholders;
• the committee will take a number of factors into account
in determining the appropriate remuneration package. For
example, these may typically include the candidate’s experience
and calibre, their circumstances, external market inuences and
arrangements for existing executive directors;
• the ongoing remuneration package oered to new directors will
only include those elements listed within the policy table;
• the committee may also consider providing additional benefits
to expatriate appointments, where appropriate; and
• the committee will provide full details of the recruitment
package for new executive directors in the next Annual Report
on Remuneration and will provide shareholders with the rationale
for the decisions that were taken.
The maximum level of variable pay (excluding buyouts for which
see below) which may be awarded in respect of a recruitment
event (internal or external), will not exceed 740% of base salary,
representing the current maximum award under the annual bonus
and ISP.
In addition, to facilitate recruitment, the committee may make a
one‑o award to buy‑out variable incentives which the individual
would forfeit at their current employer. The committee will give
consideration to any relevant factors, typically including the
form of the award (eg cash or shares), the proportion of the
performance/vesting period outstanding and the potential value
of the forfeited remuneration, including performance conditions
attached to the awards, the likelihood of those conditions being
met, and the timing of any potential payments.
In making buying-out awards, the committee may use the
relevant provision in the Financial Conduct Authority Listing Rules.
This allows for the granting of awards specifically to facilitate, in
unusual circumstances, the recruitment of an executive director,
without seeking prior shareholder approval. In doing so, the
committee will comply with the relevant provisions in force at
the date of this report.
Where an executive director is appointed from within the
organisation, the company will honour legacy arrangements in line
with the original terms and conditions.
In the event of the appointment of a new non-executive director,
remuneration arrangements will be in line with those detailed on
page 103.
Payment for loss of oce
In a departure event, the committee will typically consider:
• whether any element of annual bonus should be paid for the
financial year. Any bonus paid will be limited to the period served
during the financial year in which the departure occurs;
• whether any of the share element of deferred bonus awarded in
prior years should be preserved either in full or in part;
• whether any awards under the ISP should be preserved either in
full or in part and if relevant whether the post vesting holding
period should apply.
The committee has historically maintained a discretionary approach
to the treatment of leavers, on the basis that the facts and
circumstances of each case are unique.
In an exit situation, the committee will consider: the individual
circumstances; any mitigating factors that might be relevant;
the appropriate statutory and contractual position and the
requirements of the business for speed of change.
The default position is that an unvested ISP or DBP award or
entitlement lapses on cessation of employment, unless the
committee applies discretion to preserve some or all of the awards.
This provides the committee with the maximum exibility to review
the facts and circumstances of each case, allowing dierentiation
between good and bad leavers and avoiding ‘payment for failure’.
When considering a departure event, there are a number of
factors which the committee takes into account in determining
appropriate treatment for outstanding incentive awards.
These include:
• the position under the relevant plan documentation;
• the individual circumstances of the departure;
• the performance of the company/individual during the year
to date; and
• the nature of the handover process.
In some cases, the treatment is formally prescribed under the
rules of the relevant plan so that where there are ‘good leaver’
circumstances awards, which would otherwise lapse by default,
vest either on the normal vesting date or on cessation of
employment. These circumstances include death, injury, ill-health,
disability, redundancy or sale of the company or business. If the
director dies or leaves due to ill health or injury, ISP awards which
have less than 12 months of the performance period remaining
or DBP awards which have less than 12 months of the deferred
period to run, vest automatically on leaving. In other leaver
circumstances the committee has discretion to determine when,
and to what extent, awards vest.
The committee considers the leaver circumstances along a
continuum, ranging from ‘bad leaver’ scenarios such as termination
of employment for gross misconduct or resignation, through to the
‘good leaver’ scenarios outlined above. Accordingly the committee
may apply (or disapply) such performance conditions or time
pro-rating to awards vesting in these circumstances as it
considers appropriate.