BT 2016 Annual Report Download - page 140

BT Group plc
Annual Report 2016
146
All-employee plans – leavers
The treatment of saveshare options and directshare shares on
leaving is as determined under the respective HMRC approved
rules. For saveshare, someone who ceases to be an employee
in special circumstances (for example injury, disability, death, or
following sale of the company or business where they work) may
exercise the option within six months after leaving (or 12 months
in the case of death) or the relevant corporate event. If someone
leaves for a reason not falling within special circumstances,
the option lapses on the date the individual leaves.
ISP/DBP – change of control
In the event of a takeover or scheme of arrangement involving
the company, ISP and DBP awards will vest, at a minimum, to
the extent that any applicable performance measures have
been satisfied at the time (subject to the committee’s discretion
to determine the appropriate level of vesting, having regard to
such relevant factors as it decides to take into account). If the
acquiring company oers to exchange awards over BT shares for
awards over its shares (or shares in another company), awards
will normally be exchanged and continue under the rules of
the relevant plan. If within 12 months of a change of control, a
participants employment is terminated by his employer other than
for misconduct or performance or he or she resigned as a result
of a reduction of his or her duties or responsibilities constituting
a material breach of the individuals contract, the participant is
entitled to receive an amount equal to the dierence between
the value he or she received on the change of control he would
have received if the relevant performance condition had been
met in full.
In the event of a voluntary winding up of the company, awards
may vest on the members’ resolution to voluntarily wind-up
the company being passed.
Employment conditions elsewhere in the group
The committee considers the pay and conditions of employees
throughout the company when determining the remuneration
arrangements for executive directors although no direct
comparison metrics are applied.
In particular, the committee considers the relationship between
general changes to UK employees’ remuneration and executive
director reward.
Whilst the committee does not directly consult with our employees
as part of the process of determining executive pay, the Board does
receive feedback from employee surveys that takes into account
remuneration in general. The committee also receives updates
from the Group People Director.
Executive director and Chairman service contracts
The other key terms of the service contracts for the current
executive directors and the Chairman are set out below.
The termination provisions described above are without prejudice
to BT’s ability in appropriate circumstances to terminate in breach
of the notice period referred to above, and thereby be liable for
damages to the executive director or Chairman.
In the event of termination by BT, each executive director and the
Chairman may have entitlement to compensation in respect of his
or her statutory rights under employment protection legislation
in the UK.
Where appropriate, BT may also meet a director’s reasonable legal
expenses in connection with either his appointment or termination
of his appointment.
There are no other service agreements, letters of appointment or
material contracts, existing or proposed, between the company
and any of the executive directors
Illustration of executive director pay scenarios
Our remuneration policy aims to ensure that a significant
proportion of pay is dependent on the achievement of stretching
performance targets. The committee has considered the level
of total remuneration that would be payable under dierent
performance scenarios and is satisfied that, as the graph below
illustrates, executive pay is appropriate in the context of the
performance required and is aligned with shareholders’ interests.
The illustrative scenarios below set out the total remuneration that
might be received by each executive director for dierent levels
of performance, based on our remuneration policy.
The minimum reects base salary, pension and benefits only
which are not performance related.
Performance Assumptions
Fixed pay All scenarios • Consists of total fixed pay – base
salary, benefits and pension
– Base salary – salary eective as
at June 2014
– Benefits – amount received by
each director in 2013/14
– Pension – cash supplement in
lieu of pension provision for
2014/15
Variable
pay
Minimum • No payout under the annual
bonus
• No vesting under the ISP
On-target • 50% of the maximum payout
under the annual bonus
• 25% of maximum vesting under
the ISP
Maximum • 100% of the maximum payout
under the annual bonus
• 100% of maximum vesting
under the ISP
For these purposes, we have assumed a usual maximum ISP award of 400% of base salary for
the CEO and 280% of base salary for the GFD. The absolute maximum ISP award under our
remuneration policy is 500% of base salary.
For the GFD, we have also assumed a maximum bonus opportunity of 210% of salary.