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CHAIRMAN
Sir Iain Vallance
(d) (f)
Sir Iain Vallance was appointed a director in 1984. He served as Chief
Executive from 1986 to the end of 1995 and has been Chairman since 1987.
Sir Iain became part-time Chairman on 1 August 1998. He chairs the Nominating
and Community Support committees. Sir Iain is also a vice-chairman of
The Royal Bank of Scotland, a non-executive director of Mobil Corporation
and Scottish Enterprise, vice-chairman of the European advisory committee
of The New York Stock Exchange and a vice president of the Princess Royal
Trust for Carers. Aged 56.
EXECUTIVE DIRECTORS
Sir Peter Bonfield
CBE Chief Executive (a)
Sir Peter Bonfield was appointed to the Board on 1 January 1996 as Chief
Executive. He chairs the Group Executive Committee. Sir Peter is a fellow
of the Royal Academy of Engineering and the Institution of Electrical
Engineers. From 1981 to 1995, he worked for ICL, latterly as chairman
and chief executive. He is currently non-executive deputy chairman of
ICL, a non-executive director of AstraZeneca, and vice president of the
British Quality Foundation. Aged 54.
Robert P Brace
FCA Group Finance Director (a) (e)
Robert Brace joined the company in 1989 and was appointed to the Board
in 1993 as Group Finance Director. A career-long finance professional,
he started with Peat Marwick Mitchell (KPMG) in 1971 and subsequently
held senior finance roles with Unipart and Black & Decker. Aged 49.
Bill Cockburn
CBE, TD Group Managing Director, BT UK (a)
Bill Cockburn joined the company on 1 October 1997 as Group Managing Director
of BT's UK business and was appointed to the Board with effect from 1
April 1998. After a career in the Post Office, he became chief executive
in 1992. In November 1995, Bill Cockburn joined WH Smith as a director,
becoming chief executive in 1996. He is a non-executive director of Centrica
and Lex Service, a member of the Business in the Community board and a
trustee of the Princess Royal Trust for Carers. Aged 56.
NON-EXECUTIVE DIRECTORS
Lord Marshall
of Knightsbridge
Deputy Chairman (b) (c) (d)
Lord Marshall was appointed to the Board in 1995 and became Deputy Chairman
in January 1996. He chairs the Audit and Remuneration committees. Lord
Marshall is chairman of British Airways, Inchcape and Invensys, a non-executive
director of HSBC Holdings, RAC Holdings and The New York Stock Exchange,
and deputy president of the Confederation of British Industry. Aged 65.
Helen Alexander
(b) (d)
Helen Alexander joined the Board on 1 June 1998. She has been chief executive
of The Economist Group since January 1997. Helen Alexander joined The
Economist in 1984 and was managing director of The Economist Intelligence
Unit from 1993 to the end of 1996. She is also a non-executive director
of Northern Foods, and a member of the ethics committee of the University
College London Hospitals. Aged 42.
Dr Iain Anderson
(b) (c) (d) (e)
Dr Anderson was appointed to the Board in 1995. He is a member of the
BT Scotland Board and chairs the Pensions Committee. Dr Anderson joined
the Board of Unilever in 1988 and was the strategy and technology director
of Unilever until he retired in May 1998. He is a non-executive director
of Scottish & Newcastle, Special Adviser to the Prime Minister on
Millennium Compliance (Y2K), a director of Scottish Science Trust and
the Leverhulme Trust. Aged 60.
Neville Isdell
Ireland (c)
Neville Isdell joined the Board on 1 July 1998. Formerly President of
The Coca-Cola Co. Greater Europe Group, he is currently chairman and chief
executive of Coca-Cola Beverages, a new European bottling company. Neville
Isdell joined Coca-Cola in 1968 and has held a number of posts managing
Coca-Cola's businesses in various parts of the world. He has served on
the boards of the publicly-quoted Coca-Cola Enterprises US and Coca-Cola
Amatil Australia. Aged 55.
Keith Oates
(b) (c) (d)
Keith Oates was appointed to the Board in 1994. Formerly deputy chairman
and managing director of Marks and Spencer, he is a non-executive director
of Diageo. Keith Oates' international experience includes working for
IBM and Black & Decker. He is a member of the Financial Services Authority
and the English Sports Council and a former governor of the BBC. Aged
56.
Sir John Weston
(b) (e) (f)
Sir John Weston joined the Board on 1 October 1998. He retired as Britain's
Ambassador to the United Nations in New York in July 1998. Sir John was
formerly British Ambassador to NATO. He is also a non-executive director
of Rolls Royce and honorary president of the Association of Community
Trusts and Foundations. Aged 61.
COMPANY SECRETARY
Colin R Green
(a)
Colin Green, a solicitor, was appointed Secretary and Chief Legal Adviser
in 1994. On 1 April 1999, he became Group Commercial Director and Secretary.
Aged 50.
Key to membership of principal Board committees:
(a) Group Executive
(b) Audit
(c) Remuneration
(d) Nominating
(e) Pensions
(f) Community Support
All of the
non-executive directors are considered independent of the management of
the company
The directors submit their report and the audited financial statements of the company, British Telecommunications plc, and the group, which includes its subsidiary undertakings, for the year ended 31 March 1999.
Introduction
The business review on pages 8 to 23, the financial review on pages 26
to 39, the discussion on corporate governance on pages 44 to 46 and the
report on directors' remuneration on pages 47 to 55 form part of this
report. The audited financial statements are presented on pages 59 to
103.
Principal
activity
The group's principal activity is the supply of communication services
and equipment. In the year, 96% of group turnover arose from operations
in the UK.
Directors
The names and biographical details of the directors of the company are
given on pages 40 and 41. All served throughout the financial year, with
the exception of Helen Alexander, Neville Isdell and Sir John Weston who
joined the Board on 1 June 1998, 1 July 1998 and 1 October 1998, respectively.
In addition, Malcolm Argent and Sir Ewen Fergusson served on the Board until their retirement as directors on 31 December 1998 and 31 March 1999, respectively.
In accordance with the articles of association, Sir John Weston, having been appointed to the Board since the last annual general meeting, retires at the forthcoming annual general meeting and will be proposed for election. Dr Iain Anderson, Sir Peter Bonfield, Robert Brace and Sir Iain Vallance retire by rotation and will be proposed for re-election. Details of these directors' service contracts or contracts of appointment are included in the report on directors' remuneration on page 49 and the discussion on corporate governance on page 44, respectively.
Substantial
shareholdings
At 25 May 1999, the company had received no notification under Part VI
of the Companies Act 1985 in respect of holdings of 3% or more of the
company's issued ordinary share capital.
Interest
of management in certain transactions
During and at the end of the 1999 financial year, none of the company's
directors was materially interested in any material transaction in relation
to the group's business and none is materially interested in any presently
proposed material transactions.
Policy
on the payment of suppliers
BT's policy is to use its purchasing power fairly and to pay promptly
and as agreed.
BT has a variety of payment terms with its suppliers. The terms for payments for purchases under major contracts are settled when agreeing the other terms negotiated with the individual suppliers. It is BT's policy to make payments for other purchases within 30 working days of the invoice date, provided that the relevant invoice is presented to the company in a timely fashion and is complete. BT's payment terms are printed on the company's standard purchase order forms or, where appropriate, specified in individual contracts agreed with the supplier. The ratio, expressed in days, between the amounts invoiced to the company by its suppliers in the year ended 31 March 1999 and the amounts owed to its trade creditors at the end of the year was 28 days.
Auditors
Following the merger of Price Waterhouse and Coopers & Lybrand on
1 July 1998, Coopers & Lybrand resigned as auditors and the directors
appointed PricewaterhouseCoopers to fill the vacancy created by the resignation.
A resolution to reappoint PricewaterhouseCoopers as auditors of the company
will be proposed at the annual general meeting.
Authority
to purchase shares
The authority for the company to purchase 641 million of its shares, representing
10% of the issued share capital, in the market expires on 14 October 1999.
This authority was not used during the year and shareholders will be asked
to give a similar authority at the annual general meeting.
Annual
general meeting resolutions
The resolutions to be proposed at the annual general meeting to be held
on 14 July 1999, together with explanatory notes, appear in the separate
Notice of Annual General Meeting sent to all shareholders.
By order of the Board
C R Green
Secretary
25 MAY 1999
Registered office: 81 Newgate Street, London EC1A 7AJ
Registered in England: No 1800000
It is BT's policy in all our activities around the world to achieve best practice in our standards of business integrity. This includes a commitment to follow the highest standards of corporate governance throughout the BT group. This section of the annual report describes how BT has applied the principles set out by the London Stock Exchange, for all UK listed companies, in Section 1 of the Combined Code (the Code).
The directors consider that, throughout the year, BT has fully complied with the provisions set out in Section 1 of the Code.
The Board
The Board continues to meet every month, except in August. Its principal focus is the overall strategic direction, development and control of the group. Key matters, such as approval of the group's strategic plans and annual operating plan and budget, and monitoring the company's operating and financial performance, are reserved for the Board. These reserved matters are set out in a formal statement of the Board's role. It is sent to all directors, key senior executives and managers involved in the management of the company's principal operations, together with information on the authorities delegated by the Board and the terms of reference and membership of the principal Board and management committees.
BT's aim is for the Board to comprise approximately two-thirds non-executive directors. Six of the ten current directors are non-executive, all of whom are independent of the management of BT. Between them, the non-executive directors bring experience and independent judgement at a senior level of international business operations and strategy, marketing, doing business in the key markets in which the group now operates and international affairs.
The non-executive directors provide a strong independent element on the Board with Lord Marshall, Deputy Chairman, as the senior independent member. However, the Board operates as a single team.
Non-executive directors are appointed initially for three years. Towards the end of that period, the Board will consider whether to continue the appointment, which will then become terminable on twelve months' notice from either BT or the director. Appointments will be reviewed again by the Board before the end of the sixth year. Normally, appointments will be for a maximum of ten years. The Deputy Chairman's contract was renewed for a second three-year term from 1 April 1998. It may be terminated on twelve months' notice.
All directors are required by the company's articles of association to be elected by shareholders at the first annual general meeting after their appointment. One third of the other directors must seek re-election by the shareholders each year. This can mean that directors are not necessarily re-elected every three years. Shareholders will be asked at this year's annual general meeting (AGM) to approve a change to the articles of association to clarify the position. To comply this year with the Code, four directors will retire by rotation and seek re-election rather than three as required by the articles of association.
The Chairman and executive directors have service agreements, which are reviewed by the Remuneration Committee. Information about the periods of these contracts is in the Report on directors' remuneration.
The Board has agreed and established a procedure for directors, in furtherance of their duties, to take independent professional advice if necessary, at the company's expense. In addition, all directors have access to the advice and services of the Secretary, the removal of whom is a matter for the whole Board. He advises the Board on appropriate procedures for the management of its meetings and duties, as well as the implementation of corporate governance and compliance in the group.
On appointment, directors participate in an induction programme when they receive information about BT, the formal statement of the Board's role, the powers which have been delegated to the company's senior managers and management committees and latest financial information about the group. This is supplemented by visits to key BT locations and meetings with members of the Group Executive Committee and other key senior executives. Throughout their period in office this information is up-dated as BT's business, management structure and the competitive and regulatory environments in which it operates change. This can include further meetings with senior BT executives. Directors are also advised on appointment of their legal and other obligations as a director of a listed company, both in writing and in face-to-face meetings with the Secretary. They are reminded of these obligations each year and are encouraged to attend training courses at the company's expense.
Guidelines are in place concerning the content, presentation and delivery of papers to directors for each Board meeting, so that the directors have enough information to be properly briefed.
Principal Board committees
The Chief Executive, Sir Peter Bonfield, chairs the Group Executive
Committee. The other members are the Group Finance Director, the Group
Managing Director BT UK, the President and Chief Executive BT Worldwide,
the Group Commercial Director and Secretary, the Group Personnel Director,
the Group Director Strategy and Development, the Director of Corporate
Communications, the Group Engineering and Technology Director, and the
Managing Director, BT Cellnet and UK Mobility. The Committee develops
the group's strategy, for Board approval, and oversees its implementation.
It also finalises, before Board approval, annual operating and capital
expenditure plans and budgets, reviews operational activities and agrees
and monitors group-wide policies, where these are not reserved to the
Board.
The Nominating Committee, consisting of the Chairman, Deputy Chairman and three other non-executive directors, ensures the Board has an appropriate balance of expertise and ability. For this purpose it has agreed, and regularly reviews, a profile of the required skills and attributes. This profile is used to assess the suitability as non-executive directors of candidates put forward by the directors and outside consultants. Candidates short-listed for appointment are met by the Committee before it recommends an appointment to the Board.
The Nominating Committee also assesses candidates for executive directorships before it recommends an appointment.
The Audit Committee, comprising solely non-executive directors, is chaired by Lord Marshall. Its terms of reference, which are in writing, include reviewing BT's internal controls and published financial reports for statutory compliance and against standards of best practice, and recommending appropriate disclosure in these reports to the Board. It also reviews annually the performance of the company's auditors to ensure that an objective, professional and cost-effective relationship is maintained. It recommends to the Board the auditors' fees for their audit services. The Group Finance Director and the Group Commercial Director and Secretary attend these meetings. Each year, the Committee sets aside time to seek the views of the company's auditors in the absence of executives.
The Remuneration Committee comprises solely non-executive directors and is chaired by Lord Marshall. Further details about the Committee are included in the Report on directors' remuneration.
Committee membership is identified in the table of directors on pages 40 and 41.
Internal
financial control
The Board is responsible for the group's systems of internal financial
control.
Any system can provide only reasonable and not absolute assurance against material financial misstatement or loss. Key elements are:
- Formal policies and procedures are in place, including the documentation of key systems and rules relating to the delegation of authorities, which allow the monitoring of controls and restrict the unauthorised use of the group's assets.
- Experienced and suitably qualified staff take responsibility for important business functions. There are rigorous recruitment policies and annual appraisal procedures which assess performance against agreed objectives and identify necessary training to maintain and enhance standards of performance.
- Forecasts and budgets are prepared which allow management to monitor the key business and financial activities and risks and the progress towards financial objectives set for the year and the medium term; monthly management accounts are prepared promptly providing relevant, reliable and up-to-date financial and other information; significant variances from budget are investigated as appropriate.
- All investment projects are subject to formal authorisation procedures. The Board considers major investment projects, with other projects being approved by the Group Investment Committee (a sub-committee of the Group Executive Committee) or senior management within delegated authorities approved and reviewed by the Board.
- The Audit Committee reviews reports from management, from the internal auditors and from the external auditors, to provide reasonable assurance that control procedures are in place and are being followed.
- Formal procedures have been established for instituting appropriate action to correct weaknesses identified from the above reports.
The Audit Committee has conducted its annual review of the effectiveness of the systems of internal financial control in existence in the group for the year ended 31 March 1999 and for the period up to the date of approval of the financial statements.
The Board recognises the importance of non-financial controls. However, specific guidance on the scope, extent, nature and review of internal non-financial controls is not expected to be finalised until summer 1999. When the guidelines are finalised, the Board intends to use them to report on the whole system of internal control.
Relations with shareholders
Senior executives, led by the Chief Executive and Group Finance Director, hold meetings with the company's principal institutional shareholders to discuss the company's strategy, financial performance and specific major investment activities. As explained in the Report on directors' remuneration, the company also maintains contact, when appropriate, through the Chairman of the Remuneration Committee and appropriate senior executives to discuss overall remuneration policies and plans. Contact with institutional shareholders (and financial analysts, brokers and the press) is controlled by written guidelines to ensure the protection of share price sensitive information which has not already been made available generally to the company's shareholders.
The company's policy has always been to allow shareholders to vote at the AGM on the annual report and it is continuing that policy this year. The Board has also decided that shareholders should this year be asked to vote on the company's directors' and senior executives' remuneration policy, as set out on pages 47 to 49 in the Report on directors' remuneration.
It is also part of the company's policy to involve its shareholders fully in the affairs of the company and to give them the opportunity at the AGM to ask questions about the company's activities and prospects and to vote on every substantially different issue by proposing a separate resolution for each issue. The Board's opinion is that the re-election and fees of the auditors are inter-related issues and should therefore be dealt with by one resolution.
Shareholders are being asked this year to approve updated articles of association. These also include some changes to the current provisions. An explanation is given in the notes accompanying the Notice of the AGM. These are being dealt with in a single resolution as the Board considers changes to the company's constitution to be a single issue. The proxy votes for and against each resolution, as well as abstentions, will be counted before the 1999 AGM and the results will be made available at the meeting after shareholders have voted on a show of hands.
It is our policy for all directors to attend the AGM if at all possible. Whilst, because of ill health or other pressing reasons, this may not always be achievable, in normal circumstances this means the chairman of the Audit and Remuneration committees is at the AGM and is available to answer questions.
BT's practice is to post the annual report and Notice of AGM, given the large number of shareholders, in the most cost-effective manner. We aim to give as much notice as possible and at least 21 days, as required by our articles of association. In practice, the Report and the Notice of AGM are being sent to shareholders more than 20 working days before the AGM.
Established procedures ensure the timely release of share price sensitive information and the publication of financial results and regulatory financial statements.
Statement of Business Practice
BT's policy is to achieve best practice in our standards of business integrity for all of our activities around the world. To reinforce our determination to live up to these standards BT has, over the year, reviewed its existing Statement of Business Practice, which sets out the principles the group will observe. This review included consultation with individuals and groups, inside and outside the company. The Statement now better reflects BT's growing worldwide operations and the increasing expectations in the areas of corporate governance and business practice standards. It also recognises the importance of our joint venture partnerships and outlines how we work with our partners in the creation of added value whilst working within high standards of business practice. This new Statement is being sent to every employee and it is on the company intranet site. These high level principles are then linked into everyday policies and principles by the operating units. A confidential help line is available to employees who have questions regarding the application of these principles. We also continue to require our agents and contractors to apply these principles when representing BT.
Pension fund
BT's main pension fund - the BT Pension Scheme - is not controlled by the Board, but by trustees who are company and union nominees, with an independent chairman. The trustees look after the assets of the pension fund, which are held separately from those of the company. The pension scheme funds can only be used in accordance with its rules and for no other purpose.
Reporting
A statement by the directors of their responsibilities for preparing the financial statements is included on page 57 of the printed report.
Report
on directors' remuneration
The Remuneration Committee is made up wholly of independent non-executive directors. Throughout the year, the company has applied the principles in Section 1 of the London Stock Exchange Combined Code (the Code) and complied with the Code's provisions.
The Committee's role is to set the remuneration policy for the Chairman, the executive directors and the members of the company's Group Executive Committee. Specifically, it agrees the service contracts, salaries, other benefits, including bonuses and participation in the company's executive share plans, and other terms and conditions of employment. Lord Marshall has chaired the Committee since 1 January 1996. Its other members during the year were:
Dr Iain Anderson
Sir Ewen Fergusson (retired 31 March 1999)
Neville Isdell (appointed 1 July 1998)
Keith Oates
The Committee met five times during the 1999 financial year. The Chairman and Chief Executive are invited to attend meetings to discuss senior executive remuneration recommendations. They are not present when their own remuneration arrangements are being considered.
Although the full Board considers itself ultimately responsible for both the framework and the cost of executive remuneration, the Board has delegated prime responsibility for these issues, together with control of executive remuneration packages, to the Remuneration Committee. Non-executive directors who are not members of the Committee are entitled to receive papers and minutes of the Committee.
The Committee has access to professional advisers both within the company and externally. The Committee Chairman and senior executives maintain contact when appropriate with BT's principal shareholders and the main representative groups of the institutional shareholders to discuss the company's overall remuneration policy and its development.
Remuneration policy
BT's executive remuneration policy is in line with the company's overall
practice on pay and benefits. This is to reward employees competitively
taking into account performance, market comparisons and competitive pressures
in the communications and IT sectors worldwide. Whilst not seeking to
maintain a strict market position, it takes account of comparable roles
in similar organisations. These may be similar in size, market sector,
business complexity or international scope. As BT extends its business
globally, it takes account of markets outside the UK where the scope of
a particular role warrants this approach. The strategy for executive pay,
in general terms, is for basic salaries to reflect the relevant market
median with total direct compensation (that is, basic salary, annual bonus
payments and the value of long-term incentives) at the upper quartile
for exceptional performance.
The Committee considers that it is crucial to link a significant proportion of the total executive remuneration package to individual and corporate performance. Over several years, it has been the Committee's policy to increase the proportion of the total remuneration package linked to performance to align executive performance and reward with the interests of shareholders. Remuneration policy and arrangements are kept under constant review to achieve this objective and to ensure the company can attract and retain executives of the necessary quality in a highly and increasingly competitive marketplace.
Packages
The remuneration package for the Chairman and executive directors comprises
some or all of the following elements:
- Basic salary
Salaries are reviewed (although not necessarily increased) annually. Salaries are increased only where the Committee believes that adjustments are appropriate to reflect performance, increased responsibilities and/or market pressures.- Performance-related remuneration
Annual bonusThe annual bonus plan focuses on annual objectives and is designed to reward appropriately the achievement of results against these objectives. Targets are set at the start of the financial year based on key corporate objectives, such as revenue growth, profitability, quality of service, customer satisfaction and people management. Specific weights are attached to each objective on the basis of the BT Corporate Scorecard. The Committee retains the flexibility to enhance bonus awards in exceptional circumstances.
- BT Executive Share PIan/ BT Performance Share Plan
The BT Executive Share Plan (ESP), formerly the BT Long Term Remuneration Plan, was approved by shareholders in 1995. Awards of BT shares normally vest at the end of five years only if BT's total shareholder return (TSR) meets a pre-determined target relative to the FT-SE 100 companies and if the executive is still employed by the group. Awards are based on the executive's bonus and are therefore dependent upon his or her individual performance. The initial value of the awards is between 33% and 100% of salary. The first potential vesting of awards under the ESP will be in the 2000 financial year. Around 120 senior executives participate in the ESP.The BT Performance Share Plan (PSP) was also approved by shareholders in 1995. Like the ESP, the vesting of awards of BT shares under the PSP is subject to the company meeting a pre-determined TSR target measured against the FT-SE 100 companies. Normally, if the performance target is met and the participant is still employed by the group, the awards will vest within two years of the end of a three-year cycle (which may be extended up to five years).
The value of awards granted under the PSP has generally been around 10% to 20% of salary each year. For the awards to be granted in the 2000 financial year it is intended that the minimum value of the awards will remain at 10% of salary but the maximum value of the awards will be increased to 25% of salary to ensure that the awards are competitive. Around 1,200 senior managers, who do not participate in the ESP, will receive awards under the PSP. The first vesting under the PSP was in 1998 when 90% of the shares vested, based on BT's TSR measured against the FT-SE 100 companies, ranking in 34th position.
In the event of the company purchasing its own shares, the Remuneration Committee will review performance targets under the ESP and the PSP and adjust them if it considers such an adjustment would be appropriate.
BT Deferred Bonus Plan
The BT Deferred Bonus Plan (DBP) was introduced in 1998.The first awards, in the form of BT shares, were granted to around 200 senior executives during the 1999 financial year in respect of the 1998 financial year. The awards were equivalent in value to one-half of the executive's gross annual bonus (excluding any special bonuses) and the shares are held in trust. The shares will normally be transferred to the executive if he or she has continued to be employed by the group throughout a three-year deferred period. It is intended that the value of deferred bonuses granted in respect of the 1999 financial year will, except in a very limited number of exceptional circumstances where higher levels of award are justified, be equivalent to 50% of annual bonus. It is anticipated that around 300 senior executives will receive deferred bonuses in respect of the 1999 financial year.
BT Share Option Scheme
The BT Share Option Scheme for senior executives was not replaced after its expiry in January 1995. The last options were granted in December 1994.Details of options exercised during the 1999 financial year and unexercised options are shown on page 53.
- Pensions
For the executive directors and other senior executives, the policy is to provide pension benefits of one thirtieth of final salary for each year of service with a two-thirds pension for the surviving spouse. The executive directors and certain other senior executives have undertakings of pension benefits of two-thirds of final salary at normal retirement age with a pension of two-thirds of the director's pension for the surviving spouse. On death in service a lump sum equal to four times annual salary is payable together with a pension of two-thirds of the director's prospective pension for the surviving spouse. Pensions are based on salary alone - bonuses, other benefits and long-term incentives are excluded.The primary means of providing pensions is through the BT Pension Scheme (BTPS).
- Other benefits
Other benefits include car and driver, personal telecommunications facilities, medical and dental cover for the director and immediate family and financial counselling. During the year, the company introduced a permanent health insurance policy to provide cover for full-time executive directors and members of the Group Executive Committee.
- Other incentive plans
During the year, an incentive plan was established for senior executives in BTCellnet, the mobile phone operator owned 60% by BT. This plan specifically links an element of these executives' long-term remuneration to the performance of BT Cellnet over a three and a half year period, rather than to the performance of the BT group. All the awards are cash awards. It replaces participation in the DBP for the executives concerned for so long as it operates.The Remuneration Committee has reviewed this plan and will review any further plans of this type, to ensure they are consistent with BT's overall remuneration policy for its senior executives.
Service agreements
It is the company's policy that the Chairman and the executive directors
have service agreements providing for one year's notice, except where
it is necessary to offer longer periods to new directors from outside
BT or circumstances make it appropriate to offer a longer fixed term.
All the service agreements contain provisions dealing with the removal
of a director through poor performance. They also deal with payments to
which the director would be entitled in the event of early termination
of the contract by BT.
Outside appointments
The Committee believes there are significant benefits to both the company
and the individual from executive directors accepting non-executive directorships
of companies outside BT. The Committee will consider approving up to two
external appointments for which the director may retain the fees.
Non-executive
directors' contracts of appointment
It is the company's policy that every non-executive director has a contract
of appointment. This covers, amongst other things, the initial term for
which they are appointed, a general statement of their role and duties,
the fees they will receive as a director and supplementary fees for additional
work such as being a member of a Board Committee.
Non-executive directors are normally appointed for an initial period of three years and are then subject to 12 months' notice. Further details of their appointment arrangements are set out on page 44 in the section of this report dealing with corporate governance issues.
Non-executive
directors' remuneration
About two-thirds of the BT Board are non-executive directors who, in accordance
with BT's articles of association and as recommended by the Code, cannot
individually vote on their own remuneration. Therefore, the Board does
not consider it appropriate for the whole Board to determine non-executive
remuneration. This is set by the Chairman and the Chief Executive after
considering external advice on appropriate levels of remuneration.
The basic fee for non-executive directors, which includes membership of one committee, was increased from 1 January 1999 to £30,000 per year (previously £25,000). Additional fees for membership of Board committees range from £3,000 to £5,000 per year. Committee chairmen receive an additional fee of £2,000 a year for each committee they chair. The Deputy Chairman is paid an inclusive annual fee of £75,000 (1998: £65,000).
To align further the interests of the non-executive directors with those of shareholders, in January 1999 the company introduced a policy to encourage these directors to purchase £5,000 of BT shares each year. The directors are expected to hold those shares until they retire from the Board. All the non-executive directors have confirmed that they support this policy and will buy shares.
Remuneration
review
Directors' remuneration
As reported elsewhere in the annual report, Sir Iain Vallance became part-time
Chairman from 1 August 1998. From that date, his annual salary has been
£275,000 (from £500,000 as full-time Chairman). From 1 April 1998, fifteen
months after their previous increase, Sir Peter Bonfield's salary was
increased from £570,000 to £617,500 and Robert Brace's salary increased
from £300,000 to £330,000. Bill Cockburn was appointed to the Board on
1 April 1998. His salary from 1 July 1998 has been £465,000 (from £450,000).
From 1 March 1998, Bill Cockburn's salary was, at his request, reduced by £10,000 a month. From that date, the company made contributions of £10,000 each month to an unapproved retirement benefits scheme transferred from Bill Cockburn's previous employer. This voluntary salary reduction ceased on 30 September 1998. Bill Cockburn's bonus and other relevant benefits were determined on his full salary during the period of his voluntary salary reduction.
From 1 April 1999, Sir Peter Bonfield's salary was increased to £725,000 a year and Robert Brace's to £355,000. Bill Cockburn's salary will be increased to £495,000 from 1 June 1999.
For Sir Peter Bonfield, annual bonus awards are based wholly on the achievement of group-wide objectives and results measured against the overall BT Corporate Scorecard. His "on target" bonus for the 1999 financial year was 65% of salary, subject to a maximum of 100% of salary. In addition, Sir Peter was paid a bonus in January 1999 of £150,000 in recognition of his contribution to the sale of BT's stake in MCI to WorldCom for US$7 billion and to the agreement with AT&T for the formation of the global venture. .
For Robert Brace, Bill Cockburn and other members of the Group Executive Committee, annual bonus awards are based on the achievement of a mix of group, divisional and personal objectives. Robert Brace's bonus this year also took account of his contribution to the sale of BT's MCI stake and the formation of the global venture.
Robert Brace's "on target" bonus for the 1999 financial year was between 35% and 40% of salary, subject to a maximum of 60%.
Bill Cockburn's bonus arrangements provide for an "on target" bonus of 50% of salary, subject to a maximum of 75%.
Annual bonus awards for executive directors for the year under review ranged from 50% to 88% of salary.
The Remuneration Committee noted the particular contribution of Sir Peter Bonfield to the significant success of the company in the 1999 financial year, likewise in respect of Bill Cockburn for the performance of the UK business. It also wished to improve the retention incentives.
For the 1999 financial year, the Committee has increased the deferred bonuses which are held in the DBP and paid in shares in three years time if they are still employed by the company to twice the annual bonus for Sir Peter and to the amount of his annual bonus for Bill Cockburn.
In recognition of his contribution to the success of the company throughout the 1999 financial year, Sir Iain Vallance received a bonus of £300,000.
The remuneration (excluding pension arrangements and deferred bonuses) of the directors was as follows:
| Salary and fees | Annual
and special bonuses |
Benefits
excluding pension (a) |
Total (c) | |||||
| --------------------------- | -------------------------- | -------------------------- | -------------------- | |||||
| 1999 | 1998 | 1999 | 1998 | 1999 | 1998 | 1999 | 1998 | |
| £000 | £000 | £000 | £000 | £000 | £000 | £000 | £000 | |
| --------------------------- | ------------------------ | ----------------------- | -------------------- | |||||
| Sir Iain Vallance | 349 | 500 | 300 | 325 | 45 | 37 | 694 | 862 |
| Sir Peter Bonfield | 617 | 570 | 725 | 325 | 37 | 43 | 1,379 | 938 |
| R P Brace | 329 | 300 | 210 | 162 | 26 | 23 | 565 | 485 |
| B Cockburn | 400 | - | 280 | - | 15 | - | 695 | - |
| Lord Marshall | 75 | 65 | - | - | - | - | 75 | 65 |
| H Alexander | 24 | - | - | - | - | - | 24 | - |
| J I W Anderson | 46(b) | 38(b) | - | - | - | - | 46 | 38 |
| Sir Ewen Fergusson | 33 | 38 | - | - | - | - | 33 | 38 |
| N Isdell | 22 | - | - | - | - | - | 22 | - |
| J K Oates | 36 | 35 | - | - | - | - | 36 | 35 |
| Sir John Weston | 16 | - | - | - | - | - | 16 | - |
| M Argent | 30 | 52 | - | - | 1 | 1 | 31 | 53 |
| A W Rudge | - | 208 | - | 70 | - | 11 | - | 289 |
| Non-executive directors who retired in previous year | - | 30 | - | - | - | - | - | 30 |
| --------------------------- | ----------------------------- | ---------------------------- | -------------------- | |||||
| 1,977 | 1,836 | 1,515 | 882 | 124 | 115 | 3,616 | 2,833 | |
| --------------------------- | ----------------------------- | ---------------------------- | -------------------- | |||||
| (a) Includes other benefits as described above. In addition to his company car, Sir lain Vallance has use of a car in Scotland. |
| (b) Payments to non-executive directors include fees paid to their principal employer of £9,500 (1998 - £38,000). |
|
(c) In addition, deferred bonuses payable in shares in three years time, provided they are still employed by the company, were awarded to Sir Peter Bonfield - £1,150,000 (1998 - £163,000), Robert Brace - £82,500 (1998 - £59,000) and Bill Cockburn - £280,000. When added to the amounts paid or currently payable for the 1999 financial year, in the total above, the total remuneration of Sir Peter Bonfield was £2,529,000 (1998 - £1,101,000), Robert Brace £647,500 (1998 - £544,000) and Bill Cockburn £975,000. The directors' long-term remuneration benefits, through the exercise of share options, were as follows: |
| 1999 | 1998 | |
| £000 | £000 | |
| ---------------- | ------------------ | |
| Sir Iain Vallance | - | 415 |
| R P Brace | 891 | - |
| A W Rudge | 41 | 442 |
| ----------------------------------------------------------------------------------------------------------------------------------- | ---------------- | ------------------ |
The figures in the above table are based on the amount by which the market value of the shares on the date of exercise exceeded the option price. The figures include the employee compensation for the special dividend (see note 4 to the financial statements).
Bill Cockburn was appointed a director on 1 April 1998, Helen Alexander on 1 June 1998, Neville lsdell on 1 July 1998 and Sir John Weston on 1 October 1998. Malcolm Argent retired on 31 December 1998 and Sir Ewen Fergusson on 31 March 1999. In the previous year, Yve Newbold retired on 30 June 1997, Dr Alan Rudge on 31 October 1997, Gerald Taylor on 9 November 1997, Bert Roberts on 17 March 1998 and Birgit Breuel on 31 March 1998. Yve Newbold remains on the Community Support Committee for which she received fees of £5,000 in the year ended 31 March 1999 (1998 - £3,750) after her retirement as a director.
BT Performance
Share Plan
The first three-year performance cycle of the PSP ended on 31 July 1998
and, on the basis of the company's TSR compared with the FT-SE 100 companies,
90% of the shares vested on 19 August 1998 in 745 participants and 5 million
shares were transferred to those participants. Further awards of shares
were granted in 1998 under the second three-year performance cycle of
the PSP.
Pensions
The Chairman and all the executive directors, except Sir Peter Bonfield,
are members of the BTPS. In addition to the company's contribution, individuals
contributed 6% of salary in the year ended 31 March 1999. Sir Peter's
pension arrangements are non-approved (by the Inland Revenue) and unfunded.
When an individual will not achieve the target level of pension benefit at normal retirement age because of the Government earnings cap for calculation of pension benefits, the company may make up the shortfall by purchasing additional service in the BTPS and/or through non-approved, unfunded arrangements.
From 1 August 1998, Sir Iain Vallance has been entitled to receive an annual pension of £333,333 from the company in accordance with his supplementary pension arrangements. This pension will be increased in line with future inflation. The pension paid in the year ended 31 March 1999 amounted to £222,222.
Whilst Sir Iain is part-time Chairman he is a deferred member of the BTPS and his pension is being paid entirely by the company. Sir Iain's pension arrangements entitle his surviving widow to his full pension until July 2003 and to two-thirds of his pension after that date.
Sir Peter Bonfield's pension arrangements provide for a pension of two-thirds of his final salary at 60, inclusive of any retained benefits from his previous employment, and a surviving spouse's pension of two-thirds of his pension. He is entitled to a pension of 52% of salary if he were to retire at 55. If retirement occurs between 55 and 60, the percentage of salary used to calculate the pension will increase on a uniform basis.
Bill Cockburn is a member of the BTPS and has an unfunded and non-approved arrangement to meet the shortfall resulting from the pensions cap. In addition he has a funded non-approved retirement benefits scheme transferred from his previous employer to which the company made monthly contributions of £10,000 from 1 March 1998 to 30 September 1998. Bill Cockburn's salary was reduced, at his request, by £10,000 a month during this period.
The table below shows the increase in the accrued benefits to which each director has become entitled during the year and the transfer value of the increase in accrued benefit.
| Increase in accrued pension during year or to date of retirementin year (a) | Total accrued pension at year end or at date of retirement,if earlier (b) | Transfer value of increase in accrued benefit (c) | ||||
| ---------------------------- | ---------------------------- | ---------------------------- | ||||
| 1999 | 1998 | 1999 | 1998 | 1999 | 1998 | |
| £000 | £000 | £000 | £000 | £000 | £000 | |
| -------------------------------- | ---------------------------- | ---------------------------- | ---------------------------- | |||
| Sir Iain Vallance (d) | 1 | 9 | 333 | 332 | 5 | 159 |
| Sir Peter Bonfield | 30 | 18 | 72 | 41 | 500 | 276 |
| R P Brace | 17 | 14 | 118 | 98 | 205 | 173 |
| B Cockburn | 15 | - | 23 | - | 258 | - |
| -------------------------------- | ---------------------------- | ---------------------------- | ---------------------------- | |||
| (a) The increase in accrued pension during the year excludes any increase for inflation. |
| (b) The pension entitlement is that which would be paid annually on retirement at normal retirement age based on service to the end of the year or date of retirement if earlier. |
| (c) The transfer value has been calculated on the basis of actuarial advice in accordance with Actuarial Guidance Note GN11 and excludes directors' contributions. The transfer value represents a liability of the company rather than any remuneration due to the individual and cannot be meaningfully aggregated with annual remuneration, as it is not money the individual is entitled to receive. |
| (d) Based on service to 31 July 1998, after which no further pension entitlements accrue. |
| Directors' interests | ||
| The interests of directors and their families in the company's shares at 31 March 1999 and 1 April 1998, or date of appointment if later, are shown below: | ||
| Beneficial holdings | 1999 | 1998 |
| ---------------------------------------------------------------------------- | --------------------------------------------------------------------------------- | |
| Sir Iain Vallance | 208,452 | 208,366 |
| Sir Peter Bonfield | 9,465(a) | 9,228(a) |
| R P Brace | 144,283(a) | 30,103(a) |
| B Cockburn | 4,181 | 4,181 |
| Lord Marshall | 2,000 | 2,000 |
| H Alexander | - | -(b) |
| J I W Anderson | 4,155 | 4,155 |
| Sir Ewen Fergusson | - | - |
| N Isdell | 2,000 | -(b) |
| J K Oates | 3,878 | 3,810 |
| Sir John Weston | 1,008 | 1,000(b) |
| ---------------------------------------------------------------------------- | --------------------------------------------------------------------------------- | |
| Total | 379,422 | 262,843 |
| ---------------------------------------------------------------------------- | --------------------------------------------------------------------------------- | |
| (a) Includes 9,245 shares (1998 - 9,094 shares) purchased and held by Sir Peter Bonfield and 22,200 shares (1998 - 21,841 shares) by Robert Brace in the ESP (see note 31 to the financial statements). | ||
| (b) At date of appointment. | ||
Details of share options held at 1 April 1998, granted and exercised under the share option schemes during the year, and the balance held at 31 March 1999 are as follows:
| Number of shares under option | Option exercise price per share | Market price at date of exercise | Usual date from which exercisable | ||||||
| 1
April 1998 |
31
Mar 1999 |
Usual expiry date | |||||||
| Granted | Exercised | ||||||||
| --------------------------- | --------------------------------------------------------------------------------------------------------------------------------------- | ||||||||
| Sir Iain Vallance | 57,957 | - | - | 57,957 | 333p | 09/03/95 | 09/03/02 | ||
| 20,770 | - | - | 20,770 | 430p | 04/03/96 | 04/03/03 | |||
| 3,760 | - | - | 3,760 | 375p | 08/12/97 | 08/12/04 | |||
| --------------------------- | --------------------------------------------------------------------------------------------------------------------------------------- | ||||||||
| 82,487 | - | - | 82,487 | ||||||
| --------------------------- | --------------------------------------------------------------------------------------------------------------------------------------- | ||||||||
| Sir Peter Bonfield | 6,460 | - | - | 6,460 | 267p | 14/08/01 | 14/02/02 | ||
| --------------------------- | --------------------------------------------------------------------------------------------------------------------------------------- | ||||||||
| R P Brace | 136,890 | - | 136,890(b) | - | 263p | 734p | 06/09/92 | 06/09/99 | |
| 18,680 | - | 18,680(b) | - | 289p | 734p | 07/12/93 | 07/12/00 | ||
| 18,020 | - | 18,020(b) | - | 333p | 734p | 09/03/95 | 09/03/02 | ||
| 24,890 | - | - | 24,890 | 430p | 04/03/96 | 04/03/03 | |||
| 30,180 | - | - | 30,180 | 460p | 15/11/96 | 15/11/03 | |||
| 23,470 | - | - | 23,470 | 375p | 08/12/97 | 08/12/04 | |||
| 2,265 | - | 2,265(c) | - | 320p | 817.5p | 14/06/98 | 14/12/98 | ||
| 3,876 | - | - | 3,876 | 267p | 14/08/01 | 14/02/02 | |||
| - | 1,332(d) | - | 1,332 | 518p | 14/08/03 | 14/02/04 | |||
| --------------------------- | --------------------------------------------------------------------------------------------------------------------------------------- | ||||||||
| 258,271 | 1,332 | 175,855 | 83,748 | ||||||
| --------------------------- | --------------------------------------------------------------------------------------------------------------------------------------- | ||||||||
| B Cockburn | - | 3,330(d) | - | 3,330 | 518p | 14/08/03 | 14/02/04 | ||
| --------------------------- | --------------------------------------------------------------------------------------------------------------------------------------- | ||||||||
| A W Rudge(e) | 10,940 | - | 10,940(f) | - | 430p | 648p | 04/03/96 | 04/03/03 | |
| 2,460 | - | 2,460(f) | - | 375p | 648p | 08/12/97 | 08/12/04 | ||
| 2,254 | - | 1,193(g) | - | 306p | 670.5p | 14/06/00 | 14/12/00 | ||
| --------------------------- | --------------------------------------------------------------------------------------------------------------------------------------- | ||||||||
| 15,654 | - | 14,593 | - | ||||||
| --------------------------- | --------------------------------------------------------------------------------------------------------------------------------------- | ||||||||
| Total | 362,872 | 4,662 | 190,448 | 176,025 | |||||
| --------------------------- | --------------------------------------------------------------------------------------------------------------------------------------- | ||||||||
| (a) All of the above options were granted for nil consideration. | |||||||||
| (b) Options exercised under the BT Share Option Scheme on 12 October 1998. | |||||||||
| (c) Options exercised under the BT Employee Sharesave Scheme, in which all employees of the company are eligible to participate, on 15 July 1998. | |||||||||
| (d) Options granted under the BT Employee Sharesave Scheme, in which all employees of the company are eligible to participate, on 25 June 1998. | |||||||||
| (e) Dr Rudge retired as a director of the company on 31 October 1997. | |||||||||
| (f) Options exercised under the BT Share Option Scheme on 22 April 1998 | |||||||||
| (g) Options exercised under the BT Employee Sharesave Scheme, in which all employees of the company are eligible to participate, on 3 April 1998. Dr Rudge exercised a proportion of the shares under option in accordance with the rules of the Scheme, following which the remaining 1,061 shares under option lapsed. | |||||||||
Unrealised gains on the above share options at 31 March 1999, based on the market price of the shares at that date, excluding the employee compensation for the special dividend which is discretionary in respect of directors' share options, were as follows:
| Options excersisable | Options not excersisable | |||||
| ------------------------------------------------ | ------------------------------------------------ | |||||
| Unrealised gains | Unrealised gains | |||||
| ---------------------------- | ---------------------------- | |||||
| Number of Shares | 1999 £000 |
1998(a) £000 |
Number
of Shares |
1999 £000 |
1998(a) £000 |
|
| --------------- | ---------------------------- | --------------- | ---------------------------- | |||
| Sir Iain Vallance | 82,487 | 538 | 240 | - | - | - |
| Sir Peter Bonfield | - | - | - | 6,460 | 48 | 25 |
| R P Brace | 78,540 | 460 | 831 | 5,208 | 35 | 22 |
| B Cockburn | - | - | - | 3,330 | 16 | - |
| ----------------------------------------------------- | --------------- | ---------------------------- | --------------- | ---------------------------- | ||
(a) Based on
potions outstanding at 31 March 1998 and at the market price of shares
at that date.
The market price of the shares at 31 March was 1,011p (1998 - 650p) and
the range during the year ended 31 March 1999 was 630p to 1,118.5p.
Details of the company's ordinary shares provisionally awarded to directors,
as participants under the ESP and PSP (note 31 to the financial statements),
are as follows:
| Total
number of award shares (a)(b) |
Range
of value of award (c)(d) |
|||||
| ---------------------------------------------------------------- | ---------------------------- | |||||
| 1 April 1998 | Awarded | Dividends reinvested | 31 March 1999 | Minimum £000 |
Maximum £000 |
|
| ---------------------------------------------------------------- | ---------------------------- | |||||
| Sir Peter Bonfield | 240,420 | 71,909 | 6,511 | 318,840 | 499 | 3,223 |
| R P Brace | 256,909 | 36,508 | 6,106 | 299,523 | 478 | 3,028 |
| B Cockburn | 32,520 | 49,782 | 1,714 | 84,016 | 302 | 816 |
| A W Rudge | 124,028 | - | 2,582 | 126,610 | 256 | 1,280 |
| ----------------------------------------------------- | ---------------------------------------------------------- | ---------------------------- | ||||
| Total | 653,877 | 158,199 | 16,913 | 828,989 | 1,535 | 8,347 |
| ----------------------------------------------------- | ---------------------------------------------------------- | ---------------------------- | ||||
(a) Excluding shares purchased by each director and held under the ESP.
(b) During the 1998 financial year, Bill Cockburn was awarded 32,520 shares under the PSP. The three-year performance cycle for that award ended on 31 July 1998 and, on the basis of the position of BT's TSR at the end of the initial three-year cycle, 90% of the shares under award, including reinvested dividends, will vest. The vesting will take place within the two years following the end of the performance cycle in accordance with the rules of the plan.
(c) For the ESP, based on the market value of the company's shares at 31 MArch 1999. The minimum figure represents those shares held at 31 March 1999 which will transfer to each director at the end of year five of the plan (1999 to 2003). The maximum figure represents all shares held at 31 March 1999 which will transfer to each director at the end of year five of the plan (1999 to 2003) provided the corporate performance measure has been fully met. Normally, shares will transfer only if the individual is still employed by the group. However, the plan gives discretion to preserve awards of shares after retirement. Under this discretion, Dr Rudge's awards have been preserved until the end of year five of the plan.
(d) For the PSP, shows the market value at 31 March 1999 of the company's shares which will vest in Bill Cockburn.
At 31 March 1999,
deferred bonuses of 18,352 shares, 6,605 shares and 6,605 shares had been
awarded to Sir Peter Bonfield, Robert Brace and Bill Cockburn, respectively,
under the DBP for the 1998 financial year. These shares will normally
be transferred to participants at the end of the three-year deferred period
if those participants are still employed by BT.
At 31 March 1999, Sir Iain Vallance, Sir Peter Bonfield, Robert Brace
and Bill Cockburn each had a non-beneficial interest in 53,912 shares
(1998 - 21,919) purchased by BT Employee Shares Trustees Limited for allocation
to employees under the BT Employee Share Ownership Scheme, and 6,947,296
shares (1998 - 10,467,987) held in trust by Ilford Trustees (Jersey) Limited
for allocation to paricipating employees under the ESP, the DBP, and the
PSP.
No director had any interest in the debentures of the company or in the share capital or debentures of its subsidiaries.
Subsequent to 31 March 1999, Robert Brace has notified the company of the acquisition of beneficial holdings of a total of 26 shares under personal equity plans and Helen Alexander notified the company of the acquisition of 930 shares. There have been no other changes in the directors' interests in the share capital, including options to subscribe for shares, or in the debentures of the company and its subsidiaries between 31 March 1999 and 25 May 1999.
Directors' service agreements and contracts of appointment
The dates on which the Chairman's and each current executive directors'
initial service agreement commenced and the current expiry dates are as
follows:
| Chairman and executive directors | Commencement date of initial service agreement | Expiry date of current service agreement |
| ---------------------------------------- | ---------------------------------------- | ---------------------------------------- |
| Sir Iain Vallance | 6 August 1984 | 21 July 2000(a) |
| Sir Peter Bonfield | 1 January 1996 | 31 December 1999(b) |
| R P Brace | 1 October 1993 | (c) |
| B Cockburn | 1 April 1998 | 30 September 1999 (d) |
| ---------------------------------------- | ---------------------------------------- | ---------------------------------------- |
(a) Sir Iain Vallance entered into a new agreement when he became part-time Chairman on 1 August 1998. To ensure Sir Iain's contribution to BT for a reasonable period after he took up his part time role, this agreement is for an initial fixed two-year term.
(b) The initial term of Sir Peter Bonfield's agreement was extended in the year ended 31 March 1998. After 31 December 1999 the agreement can be terminated by either the company or Sir Peter on 12 month's notice.
(c) Terminable on 12 months' notice by either the company or Robert Brace.
(d) Terminable after 30 September 1999 on 12 months' notice by either the company or Bill Cockburn.
The dates on which the current non-executive directors' contracts of appointment commenced and the current expiry dates are as follows:
| Non-executive director | Commencement date of initial contract | Expiry date of current contract |
| ---------------------------------------- | ---------------------------------------- | ---------------------------------------- |
| Lord Marshall | 1 Apri 1995 | 31 March 2001 |
| H Alexander | 1 June 1998 | 31 May 2001 |
| J I W Anderson | 1 November 1995 | (a) |
| N Isdell | 1 July 1998 | 30 June 2001 |
| J K Oates | 1 June 1994 | (a) |
| Sir John Weston | 1 October 1998 | 30 September 2001 |
| ---------------------------------------- | ---------------------------------------- | ---------------------------------------- |
(a) Terminable on 12 months' notice by either the company or the director or on one month's notice effective on the sixth anniversary of initial appointment.
There are no other service agreements or material contracts, existing or proposed, between the company and the directors. There are no arrangements or understandings between any director or executive officer and any other person pursuant to which any director or executive officer was selected to serve. There are no family relationships between the directors.
By order of the Board
Lord
Marshall of Knightsbridge
Deputy Chairman and Chairman
of Remuneration Committee
25
May 1999