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Remuneration policy
This part of the Report on directors’ remuneration is not subject to audit. |
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Constitution and process |
The directors consider that BT has,
thoughout the year, complied with the provisions set out in Section
1 of the 2003 Combined Code on Corporate Governance. Shareholders
will be invited to approve this report at the company’s 2005
AGM. The Board is ultimately responsible for both the structure and
amount of executive remuneration, but it has delegated prime responsibility
for executive remuneration to the Remuneration Committee. The Committee
is made up wholly of independent non-executive directors. The terms
of reference of the Committee are available on the company’s
website at www.bt.com. The Committee’s
role is to set the remuneration policy and individual remuneration
packages for the Chairman and the senior management team, comprising
the executive directors, members of the Operating Committee (OC) and
other senior executives reporting to the Chief Executive. This includes
approving changes to the company’s long-term incentive plans,
recommending to the Board those plans which require shareholder approval
and overseeing their operation. In this role the Committee also monitors
the structure of reward for executives reporting to the senior management
team and determines the basis on which awards are granted under the
company’s executive share plans. The Committee met five times
during the financial year 2004/05. Sir Anthony Greener has chaired
the Committee since 18 July 2001. Other members of the Committee who
served during the financial years 2003/ 04 and 2004/05 were:
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Maarten van den Bergh |
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Lou Hughes |
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Margaret Jay |
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Carl Symon. |
The Chairman and Chief Executive are invited to attend meetings. They are not present when matters affecting their own remuneration arrangements are considered. No director or executive is involved in any decision relating to his or her remuneration. 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 from within the company and externally. Towers Perrin (HR consultants); Ben Verwaayen, Chief Executive; Ian Livingston, in his capacity as Group Finance Director; Alex
Wilson, Group HR Director and Larry Stone, Company Secretary, provided advice that materially assisted the Committee in relation to directors’ remuneration in the financial year 2004/05. Towers Perrin, who are appointed by the company, provide BT with a range of data and advisory services covering all
aspects of executive pay, bonus arrangements, shares and benefits. The Committee has agreed that Towers Perrin may advise both the Committee and BT, and should be invited to attend meetings when major remuneration policy issues are being discussed.
BT’s
executive remuneration policy is to reward employees competitively,
taking into account individual line of business and company performance,
market comparisons, and the competitive pressures in the information
and communications technology industry as BT focuses on growth through
transformation. Base salaries are positioned around the mid-market,
with total direct compensation (basic salary, annual bonus –
cash and deferred shares – and the expected value of any long-term
incentives) to be at the upper quartile only for sustained and excellent
performance. There are no plans to change this policy. A significant
and increasing proportion of the total executive remuneration package
is linked to line of business and/or corporate performance.
Remuneration arrangements and performance targets are kept under regular review to achieve this.
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