|Report of the Board Committee on Executive Remuneration|
The Board Committee on Executive Remuneration comprises non-executive directors of the company. It has been chaired since 1 January 1996 by Sir Colin Marshall, non-executive Deputy Chairman, and its members are shown elsewhere. The Committee was previously chaired by Paul Bosonnet until his retirement as non-executive Deputy Chairman on 31 December 1995. Sir Colin Marshall joined the Committee on 20 September 1995 and Dr Iain Anderson on 1 November 1995. Sir Michael Bett was a member until his retirement as a director on 31 January 1996. The Committee determines the remuneration, benefits and terms and conditions of employment of the executive directors and the members of the company’s Executive Committee. The Committee met six times during the year ended 31 March 1996.
The Committee considers that the company complies with Section A of the best practice provisions of the Stock Exchange Listing Rules. The Committee has also given full consideration to Section B of the best practice provisions in framing its remuneration policy.
BT’s executive remuneration policy is to reward senior executives competitively. The Committee does not seek to maintain any strict market position but rather to ensure that pay is set appropriately and in the knowledge of pay practice amongst appropriate comparators. The Committee focuses on the largest companies by market capitalisation, i.e. the FT-SE 100 and in particular on those organisations where the complexity of roles, of the business and the extent of international scope are comparable. The Committee obtains advice and information from external experts.
|The main components of the remuneration package for
executive directors are:
Sir Iain Vallance’s contract is subject to twelve months’ notice either side which can expire at any time after 5 August 1997. Dr Rudge’s existing contract expires on 5 August 1997 and it is intended to extend it to 31 October 1997, the last day of the month in which he reaches the age of 60. The company intends to offer Mr Brace a one-year rolling contract in August 1996 to replace his existing contract which expires on 5 August 1997. Sir Peter Bonfield, who joined the company as Chief Executive on 1 January 1996, has an initial three-year contract which may be terminated at any time after 31 December 1998 by either party giving 12 months’ notice.
Sir Ewen Fergusson and Dr Anderson have contracts of appointment as non-executive directors which expire on 23 May 1996 and 31 October 1998, respectively. The Board has agreed to continue Sir Ewen Fergusson’s appointment from 24 May 1996 subject to a one-year period of notice on either side.
With the appointment of the new Chief Executive and the subsequent Board restructuring, it was mutually agreed that Mr Hepher, the former Group Managing Director, would leave on 31 December 1995 before the expiry of his contract. In these circumstances, the company is abiding by the terms of his contract and Mr Hepher continues to receive his salary and contractual benefits until his service contract expires on 5 August 1997. He may also exercise options held under the BT Share Option Scheme until 31 December 1996.
The Committee believes the company benefits from executive directors accepting appointments to non-associated companies as non-executive directors. All appointments require the approval of the Committee. The Committee will normally allow one appointment although, where it is appropriate and in the company’s interest, more than one may be allowed. The practice has been for directors to retain fees from non-executive appointments.
Non-executive directors’ remuneration
It is intended to review these fees during 1996 with any changes to be effective from 1 January 1997.
|The remuneration (excluding pension arrangements) of the directors, including the Chairman who was the highest paid director, was as follows:|
|Salary and fees||Bonus||Total|
|Sir Iain Vallance||476.3||465.0||162.0||115.0||19.2||19.3||657.5||599.3|
|Sir Peter Bonfield||118.8||-||42.5||-||4.5||-||165.8||-|
|A W Rudge||268.8||245.0||100.0||63.0||13.4||15.0||382.2||323.0|
|R P Brace||233.8||215.0||85.0||54.0||14.2||82.5(b)||333.0||351.5|
|A J Booth||-||65.0||-||-||-||9.2||-||74.2|
|M L Hepher||373.1(c)||415.0||154.0||100.0||16.2(c)||21.6||543.3||536.6|
|Sir Colin Marshall||34.1||-||-||-||0.4||-||34.5||-|
|J I W Anderson||11.4(d)||-||-||-||-||-||11.4||-|
|Sir Ewen Fergusson||30.0||30.0||-||-||0.2||0.2||30.2||30.2|
|Y M Newbold||27.1(d)||25.5||-||-||0.2||0.2||27.3||25.7|
|J K Oates||26.8||21.0||-||-||0.2||-||27.0||21.0|
|B C Roberts||-||-||-||-||-||-||-||-|
|Rt Hon Lord Tebbit||27.7||25.5||-||-||-||-||27.7||25.5|
|Sir Michael Bett||31.3||27.5||-||-||1.4||13.0||32.7||40.5|
|P G Bosonnet||56.3||75.0||-||-||-||-||56.3||75.0|
|Sir Geoffrey Mulcahy||-||5.6||-||-||-||-||-||5.6|
|Sir David Scholey||-||13.6||-||-||-||-||-||13.6|
|(a) Includes such benefits as company car, petrol, driver,
personal telephone facilities, medical cover, financial
counselling and share schemes.
(b) Includes £66,888 reimbursement of relocation expenses.
(c) For the period ended 31 December 1995. Under the terms for his leaving the company, Mr Hepher continues to receive his salary and contractual benefits until his service contract expires on 5 August 1997. The total salary payable for the period 1 January 1996 to 5 August 1997 is £686,600 and benefits are estimated at £57,700. For the year ended 31 March 1996, he received a bonus of £154,000.
(d) Payments to non-executive directors include fees paid to their principal employer of £11,375 for Dr Anderson and £12,750 for Mrs Newbold.
|(e) Includes salary as an executive director for the period to
31 July 1994.|
(f) Benefits include a company car, valued at £19,500, transferred to Mr Argent.
The directors’ long-term remuneration benefits, through the exercise of share options, were as follows:
|Sir Peter Bonfield joined the Board on 1 January 1996, Sir Colin Marshall and Mrs B Breuel on 1 April 1995 and
Dr J I W Anderson on 1 November 1995. In the previous financial year, Mr J K Oates joined the Board on 1 June 1994 and
Mr B C Roberts on 14 October 1994. Mr Roberts receives no remuneration as a non-executive director of the company.
Mr M L Hepher and Mr P G Bosonnet retired on 31 December 1995. Sir Michael Bett retired on 31 January 1996; he remains chairman of Cellnet Group Limited, a subsidiary company. Mr M Argent had special responsibilities from the date of his retirement as an executive director on 31 July 1994 until 31 December 1995. In the previous financial year, Mr A J Booth and Sir Geoffrey Mulcahy retired on 30 June 1994 and Sir David Scholey on 14 October 1994.
The detailed pension arrangements for the Chairman are as follows. Sir Iain Vallance is a member of the BT Pension Scheme and during the year he contributed 6% of his salary to the scheme and the company made payments of £46,039 (1995 - £44,952). This consisted of £45,244 (9.5% of salary) which the company contributed to the scheme and £795 top-up life insurance cover. As referred to above, the Chairman’s pension arrangements have been modified during the year, and the main part of the provision for the year of £838,000 (1995 - £51,150) for his unfunded pension benefits is to cover the possibility of his retiring after his 55th birthday on a full pension.