TERMS OF REFERENCE

Introduction

The Nominating and Governance Committee ensures that there is an appropriate balance of skills, experience, independence and knowledge on the Board and its Committees, reviews the size and composition of the Board and makes recommendations to the Board.

The remit of the Committee also includes the determination and review of BT’s governance policies, particularly with regard to corporate governance, ethics, business principles, and international trading regulation issues and data protection. The Committee has established the following regional governance committees to cover BT’s operations around the world:

Committee Members

Sir Michael Rake - Chairman of the Committee
Tony Ball 
Patricia Hewitt
Phil Hodkinson
Nick Rose 

Note: For matters to do with succession to the chairmanship of the Board, including appointment the Committee will be chaired by the Senior Independent Director.

1. Membership & Meetings

1.1. The Committee, which shall be a Committee of the Board, shall be composed of at least four members.

1.2. All members of the Committee including its Chairman shall be independent non-executive directors, other than the Company Secretary who attends all meetings.

1.3. The Board shall appoint members of the Committee, the Committee Chairman and any deputy. In the absence of the Committee Chairman and/ or an appointed deputy, the remaining members present shall elect one of themselves to chair the meeting.

1.4 Only members of the Committee have the right to attend Committee meetings. However, other individuals such as the chief executive may be invited to attend for all or any part of the meeting, as and when appropriate and necessary.

1.5. The Company Secretary or his nominee shall act as Secretary of the Committee.

The Committee meets quarterly, or more frequently if required and at other times when the Chairman of the Committee requires. Also a Committee member or the Company Secretary may call additional meetings as necessary.

The Chief Executive is invited to attend most of the Committee's meetings.

2. Proceedings

2.1. A quorum for the Committee is two Committee members. A duly convened meeting of the Committee at which a quorum is present shall be competent to exercise all or any of the authorities and duties vested in or exercisable by the Committee.

2.2. The Committee may delegate any of its powers to one or more of its members or the Company Secretary.

2.3. The terms of reference and effectiveness of the Committee shall be kept under review and the necessary recommendations made to the Board.

3. Minutes

3.1. The minutes of meetings of the Committee shall be circulated to all members of the Committee and to nominated recipients as soon as practicable after the meeting. The minutes shall also be circulated to all members of the BT Group plc Board unless it is inappropriate to do so.

PRINCIPAL DUTIES

4. Nominating

4.1. To review regularly the size and composition of the Board in order to ensure an appropriate balance of skills, experience, independence and knowledge of the group, recommending any proposed changes to the Board. This will include keeping under review the policy on diversity on the Board, including gender, and any measurable objectives that it has set for implementing the policy.

4.2. To keep under review the need for appointments, prepare a description of the specific experience and abilities needed for each Board appointment with due regard for the benefits of diversity on the Board including gender, consider candidates for appointment as either executive or non-executive directors and recommend appointments to the Board.

4.3. To recommend to the Board whether to reappoint non-executive directors at the end of their respective terms of office and in relation to any term beyond six years undertaking a particular rigorous review.

4.4. To review the time required from the Senior Independent Director and the non-executive directors generally to discharge their duties and the amount of time required from each non-executive director to discharge his or her duties in relation to Board and committee meetings and other commitments to the Company.

4.5. To keep under review, the number of external directorships and other interests held by the Chairman and members of the Board and Operating Committee.

4.6. To advise the Board, on succession planning for the roles of Chairman, Senior Independent Director, CEO and for all other Board appointments, including the Company Secretary.

5. Governance & Compliance

To:

In particular to:-

5.1. endorse BT’s governance and compliance policies, with particular focus on the key compliance programmes

5.2. receive regular reports on the effectiveness of, and compliance with, BT’s governance and compliance policies, with particular focus on the key compliance programmes.

5.3. keep under review BT’s governance framework so that it continues to be fit for purpose to meet BT’s business and organisational health goals (including simplicity and empowerment) and is consistent with BT’s approach to risk and consider proposals from the Company Secretary on:

5.3.1. the role of the Board and its main Committees;

5.3.2. the corporate governance framework;

5.3.3. delegation of authority and authority levels; and

5.3.4. reserved powers;

and to make recommendations to the Board about any changes.

5.4. review the governance and compliance structures within BT’s lines of business, (including Group operating businesses) , including the approval of the terms of reference of any governance committee.

5.5. review BT’s regional approach to governance, including to approve changes to the structure of the Regional Governance Committees where appropriate, their terms of reference and composition (delegating the approval of appointments to the Regional Governance Committees, to the Group Finance Director, Group People Director and Company Secretary).

5.6. adopt a code of ethics for BT’s Chief Executive, Group Finance Director, senior finance managers and for any other people the Committee considers from time to time appropriate.

5.7.1 review the process for and ensure that employees and third parties are aware of how to report confidentially instances of potential or actual non-compliance with internal governance and compliance polices or external compliance obligations (“whistleblowing” procedures) being matters that are not accounting or audit that fall within the remit for the Board Audit & Risk Committee.

5.7.2. review the effectiveness of all Whistleblowing procedures within the BT group

5.8. keep under review that the Board and itsCommittees are appropriately receiving assurance on all major governance and compliance matters, identifying if appropriate any overlaps or gaps.

5.10. oversee and monitor where BT does business including the governance around decisions to do business, or not, in a potentially high risk jurisdiction

5.11. review BT’s approach to the structure of BT’s compliance training.

5.12. oversee the policy for:

5.12.1. the composition of and appointments to the Boards of subsidiary and associated companies and third parties;

5.12.2. managing conflicts of interest (and refer any proposed changes to the Board).