Sir Christopher Bland was appointed Chairman on 1 May 2001. His annual salary is £500,000.

Ben Verwaayen joined the company on 14 January 2002 on an annual salary of £700,000 and became Chief Executive on 1 February 2002. Under his service agreement, Ben Verwaayen is entitled to a pro rata on target bonus for the 2002 financial year of £122,000. This was increased by the Remuneration Committee to £152,000 to reflect corporate performance.

Directors' remuneration payable in respect of their services as directors of BT (excluding pension arrangements and deferred bonus awards) was as follows:

	Salary and fees		Annual and special bonus		Benefits excluding pensiona		Totalcfj
	2002 £000	2001 £000	2002 £000	2001 £000	2002 £000	2001 £000	2002 £000	2001 £000
Sir Christopher Bland	458	-	-	-	3	-	461	-
B Verwaayenfhk	151	-	152	-	36	-	339	-
P Danonfh	164	-	300	-	16	-	480	-
A Greenfh	156	-	200	-	10	-	366	-
Dr P Reynoldsfh	147	-	180	-	11	-	338	-
Sir Anthony Greener	86	25	-	-	-	-	86	25
L R Hughes	36	32	-	-	-	-	36	32
Baroness Jayh	7	-	-	-	-	-	7	-
J F Nelsonh	7	-	-	-	-	-	7	-
C Symonh	8	-	-	-	-	-	8	-
M van den Bergh	40	22	-	-	-	-	40	22
H Alexander	27	35	-	-	-	-	27	35
Dr J I W Andersoni	29	57	-	-	-	-	29	57
Sir Peter Bonfieldce	683	780	574	481	53	50	1,310	1,311
R P Bracem	-	380	-	130	-	31	-	541
B Cockburnb	-	516	-	200	-	45	-	761
P Hamptoncd	435	181	285	100	27	5	747	286
N Isdellg	96	39	-	-	-	-	96	39
Lord Marshall	22	75	-	-	-	-	22	75
J F de Moller	27	35	-	-	-	-	27	35
J K Oates	-	30	-	-	-	-	-	30
Sir Iain Vallanceal	29	342	-	125	4	51	33	518
Sir John Weston	29	38	-	-	-	-	29	38
	2,637	2,587	1,691	1,036	160	182	4,488	3,805

^a   Includes other benefits as described above. Sir Iain Vallance had use of a car in Scotland.
^b   On the terms of his leaving the company on 31 March 2001, Bill Cockburn was entitled to salary and benefits for one year. In the 2002 financial year, he received a salary of £520,000 and benefits of £113,000.
^c   In addition, deferred bonuses, payable in shares in three years' time, were awarded in 2001 to Sir Peter Bonfield £481,000; Philip Hampton £50,000. When added to the amounts paid for the 2001 financial year, in the table above, the total remuneration of Sir Peter Bonfield was £1,792,000 and Philip Hampton £336,000.
^d   On the terms of his leaving the company on 30 April 2002, a termination payment of £217,500 was made to Philip Hampton, equivalent to the balance of the initial period of his service agreement together with a sum of £9,000 in respect of benefits for that period. The estimated cost of providing Philip Hampton with the level of pension benefits to which he would have been entitled had he remained in pensionable service until 31 October 2002 was £87,000.
^e   On the terms of his leaving the company on 31 January 2002, Sir Peter Bonfield will receive the sum of £820,000 payable in 12 monthly instalments of which £137,000 was received in the 2002 financial year. He will also receive benefits for one year of which £25,000 was received in the 2002 financial year. Sir Peter also received a payment equivalent to his annual on-target bonus of £615,000. The estimated cost of providing Sir Peter with one additional year of pension service is £512,000.
^f   The bonuses of Pierre Danon, Andy Green and Paul Reynolds relate to the whole year and have not been apportioned between their Executive Committee and Board roles. In addition, deferred bonuses payable in shares in three years' time, were awarded to Ben Verwaayen £152,000, Pierre Danon £150,000, Andy Green £100,000 and Paul Reynolds £90,000. When added to the amounts paid or payable for the 2002 financial year, in the table above, the total remuneration of Ben Verwaayen was £491,000; Pierre Danon £630,000; Andy Green £466,000 and Paul Reynolds £428,000.
^g   This includes fees of £64,000 received by Neville Isdell in the 2002 financial year as Chairman designate of Yell.
^h   None of these directors was previously a director of British Telecommunications plc.
ⁱ   Dr Anderson receives fees of £12,000 per annum as Chairman of the BT Scotland Board. From the date of his retirement from the BT Board until 31 March 2002, he received fees of £6,000.
^j   Included in this total and in note f is the remuneration received by, or payable to, directors of BT Group plc for their services since the completion of the BT restructuring on 19 November 2001. The aggregate emoluments of the directors amounted to £3,018,000. The aggregate amount paid to directors as deferred bonuses payable in shares was £492,000. The aggregate of contributions paid under defined contribution arrangements was £3,975. Retirement benefits are accruing to two directors under defined contribution arrangements and to four directors under a defined benefit scheme. The emoluments for the highest paid director for the period amounted to £749,000.
^k   Ben Verwaayen is entitled to relocation expenses of up to £200,000. No payments were made by the company in this regard during the 2002 financial year. He is also entitled to a housing allowance of £250,000 per annum for three years of which £36,000 was received in the 2002 financial year and this is included in the table above.
^l   Sir Iain Vallance, following his retirement from the Board, will receive fees as President Emeritus of £350,000 per annum until 31 July 2002. He received £321,000 for the 2002 financial year. He will also receive benefits for one year of which £38,000 was received in the 2002 financial year. He is entitled to a bonus of £600,000 if his contract is still in force on 31 July 2002.
^m   Robert Brace received a payment of £4,000 in lieu of benefits for the 2002 financial year.

Pierre Danon, Andy Green and Paul Reynolds joined the Board on 19 November 2001 on salaries of £450,000, £425,000 and £400,000, respectively. Philip Hampton's salary of £435,000 remained unchanged during the 2002 financial year. Bonus awards for these directors are based on a mix of group, line of business and personal objectives. Their on-target bonuses for the 2002 financial year were 50% of salary, subject to a maximum of 75%.

Annual bonus awards to executive directors ranged from 45% to 70% of annual salary.

Following this year's salary review there will be no increase on 1 June 2002 to basic salaries of directors.

Ian Livingston joined the Board on 8 April 2002 on a salary of £450,000.

Sir Peter Bonfield's pro rata bonus in respect of the 2002 financial year up until leaving the Board on 31 January 2002 was based predominantly on the achievement of group-wide objectives and results measured against the overall BT scorecard. He was also bonused on the achievement of personal objectives. His on-target bonus for the 2002 financial year was 75% of salary of which two-thirds was targeted against the scorecard and one-third against the achievement of personal objectives. His maximum bonus was 100% of salary.

On 1 August 2001, separate awards of 7,531 shares under the DBP vested in former directors Robert Brace and Bill Cockburn. The value of each of these awards on the vesting date was £36,041. In addition, on the same date an award of 87,589 shares under the ESP vested in Robert Brace, the market value of which on the date of vesting was £419,177.

On 2 January 2002, an award of 189,575 shares under the ESP and 27,620 shares under the DBP vested in Sir Peter Bonfield. The market prices of those awards on the date of vesting were £483,416 and £70,431 respectively.

Board changes
Sir Iain Vallance retired as Chairman and left the Board on 1 May 2001, when he was appointed President Emeritus. He was succeeded as Chairman by Sir Christopher Bland.

Lord Marshall retired as Deputy Chairman and left the Board on 18 July 2001.

Dr Iain Anderson retired as a director on 30 September 2001.

Pierre Danon, Andy Green and Paul Reynolds joined the Board on 19 November 2001.

Helen Alexander, Neville Isdell, June de Moller and Sir John Weston retired as directors on 14 January 2002.

Baroness Jay, John Nelson, Carl G Symon and Ben Verwaayen joined the Board on 14 January 2002.

Sir Peter Bonfield retired as Chief Executive and left the Board on 31 January 2002. He was succeeded by Ben Verwaayen.

Yve Newbold, who retired from the Board in June 1997, remains a member of the Community Support Committee for which she received fees of £5,000 in the 2002 financial year (2001 - £5,000).

Loans
Prior to their appointment to the Board on 19 November 2001, Pierre Danon and Paul Reynolds each had an interest free loan from the company of £375,000 and £300,000, respectively to cover relocation expenses. The loans are repayable over ten years. At 31 March 2002, Pierre Danon owed £318,750 and Paul Reynolds owed £300,000. During the 2002 financial year, the maximum amount outstanding was £675,000, being the combined value of the loans to Pierre Danon and Paul Reynolds at their date of appointment.

Termination payments
Ben Verwaayen's contract entitles him on termination of his contract by BT to the payment of £700,000 and, in addition, if the termination occurs during his first year of employment, he will be entitled to be paid a pro rata amount of £700,000 for the part of the year remaining.

The contracts of Pierre Danon, Andy Green, Ian Livingston and Paul Reynolds entitle them on termination of their contract by BT to payment of salary and the value of benefits until the earlier of 12 months' from notice of termination or the director obtaining full-time employment.

If the contract of an executive director is terminated by BT within one year after BT entering into a scheme of arrangement or becoming a subsidiary of another company, he will be entitled to receive the higher of that current year's on target bonus or the previous year's bonus, the market value of shares awarded under an employee share ownership plan or deferred bonus plan that have not vested together with a year's salary and the value of any benefits.

Pensions
Sir Christopher Bland is not a member of any of the company pensions schemes, but the company matches his contributions, up to 10% of the earnings cap, to a personal pension plan. Company contributions of £8,745 were payable in respect of the 2002 financial year. The earnings cap is a restriction on the amount of pay which can be used to calculate contributions and benefits due from a tax approved pension scheme.

Ben Verwaayen is not a member of any of the company's pension schemes, but the company has agreed to pay an amount equal to 20% of his salary towards his own pension arrangements. No amounts were paid in the 2002 financial year. BT also provides him with a lump sum death in service benefit of four times his salary.

Ian Livingston is not a member of any of the company's pension schemes, but the company has agreed to pay an amount equal to 30% of his salary towards his own pension arrangements. BT also provides him with a lump sum death in service benefit of four times his salary.

Pierre Danon's pension accrues at the rate of one-thirtieth of his final salary for each year of service. In addition, a two-thirds widow's pension would be payable on his death. He is a member of the BT Pension Scheme, but as he is subject to the earnings cap the company has agreed to increase his benefits to the target level by means of a non-approved, unfunded arrangement.

Andy Green is a member of the BT Pension Scheme. From 31 December 1997 the company has been purchasing an additional 203 days of pensionable service each year to bring his pensionable service at age 60 up to 40 years. A two-thirds widow's pension would be payable on his death.

Paul Reynolds is a member of the BT Pension Scheme. From 1 July 1996 the company has been purchasing an additional 109 days of pensionable service each year to bring his pensionable service at age 60 up to 40 years.

A two-thirds widow's pension would be payable on his death.

Philip Hampton left the company on 30 April 2002. His pension accrued at the rate of one-thirtieth of his final salary for each year of service. In addition, a two-thirds widow's pension would be payable on his death. He was a member of the BT Pension Scheme, but as he was subject to the earnings cap, the company agreed to increase his benefits to the target level by means of a non-approved, unfunded arrangement. On leaving the company his deferred pension was increased to the level it would have been had he completed two years' service.

Sir Peter Bonfield left the company on 31 January 2002. His pension arrangements provided for a pension of two-thirds of his final salary at age 60, inclusive of retained benefits from his previous employer, and a widow's pension of two-thirds of his pension. On leaving he was granted an additional one year's pensionable service which brought his accrued pension to 62.7% of his final salary, inclusive of retained benefits from his previous employer. Under the terms of his pension arrangements the pension was put into payment on leaving service without an actuarial reduction being applied.

Sir Iain Vallance was part-time Chairman and subsequently President Emeritus, and is a deferred member of the BT Pension Scheme. He is currently receiving a pension, being paid by the company, which in the 2002 financial year amounted to £355,535 (2001 - £344,177). 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.

The table below shows the increase in the accrued benefits, including those referred to above, 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 retirement in yeara		Total accrued pension at year end or at date of retirement, if earlierb		Transfer value of increase in accrued benefitc
	2002 £000	2001 £000	2002 £000	2001 £000	2002 £000	2001 £000
P Danon	6	-	20	-	57	-
A Green	7	-	99	-	93	-
Dr P Reynolds	14	-	87	-	180	-
Sir Peter Bonfieldd	84	37	321	235	1,785	683
P R Hamptone	23	6	29	6	259	66
R P Brace	-	9	-	150	-	118
B Cockburn	-	52	-	94	-	963

^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   As explained in note e to the table here, Sir Peter Bonfield's pension benefits were increased on leaving the company. The entitlement shown above is after taking account of this increase.
^e   As explained in note d to the table here, Philip Hampton's pension benefits were increased on leaving the company. The entitlement shown above is after taking account of this increase.

Directors' interests
The interests of directors and their families in the company's shares at 31 March 2002 (BT Group plc) and 1 April 2001 (British Telecommunications plc), or date of appointment if later, are shown below:

	No. of shares
Beneficial holdings	2002	2001
Sir Christopher Bland	673,876	-	a
B Verwaayen	387,876	-	a
Dr P Reynolds	34,364	34,098	a,b,c
A Green	62,316	62,316	a,d
P Danon	29,590	23,628	a
Sir Anthony Greener	11,615	8,936
L Hughes	6,800	6,800
M van den Bergh	4,800	1,000
J F Nelson	50,000	800	a
C G Symon	3,819	3,819	a
Baroness Jay	-	-	a
P Hampton	1,014	780
Total	1,266,070	142,177

^a   At date of appointment.
^b   Includes 2,462 shares purchased and held by Paul Reynolds in the ESP (see note 34 to the financial statements).
^c   Paul Reynolds purchased 50 shares on 12 April 2002 and 50 shares on 15 May 2002 as a participant in the BT Group Employee Share Investment Plan.
^d   Includes 4,196 shares purchased and held by Andy Green in the ESP (see note 34 to the financial statements).

Details of share options held at 31 March 2002 are as follows:

		Number of shares under option 31 March 2002a		Option exercise price per share		Usual date from which exercisable		Usual expiry date
Sir Iain Vallancec		30,528		293	p	04/03/96		04/03/03
		5,526		255	p	08/12/97		08/12/04
Sir Christopher Bland		314,244	d	318	p	01/05/04		01/05/11
B Verwaayen		1,121,121	e	250	p	11/02/05		11/02/12
Dr P Reynolds		1,483		465	p	19/11/01		13/05/02
		4,555		218	p	14/02/07		14/08/07
A Green		567		653	p	19/11/01		13/05/02
Total		1,478,024

^a Prior to the demerger, options under the BT Share Option Scheme and the BT Global Share Option Plan were surrendered by participants. Those options were replaced by options over BT Group shares which were granted on 17 December 2001 under the BT Group Legacy Option Plan. The value of the replacement options was determined by averaging the combined share price of the BT Group plc and the mmO2 plc shares over the 20 dealing days following the demerger on 19 November 2001 (see note 34 to the financial statements).
^b Options under the BT Employee Sharesave Scheme became exercisable on the scheme of arrangement and lapsed on 13 May 2002 (see note 34 to the financial statements).
^c Sir Iain Vallance exercised an option over 85,187 shares at an option price of 226p on 27 February 2002. This option under the BT Group Legacy Option Plan replaced an option over 57,957 shares with an option price of 333p granted in 1992: the market price of the shares on the date of exercise was 263p per share. In addition, compensation in respect of the September 1997 special dividend was paid, amounting to £26,000.
^d Option granted on 22 June 2001. It was a term of Sir Christopher Bland's initial service agreement that (i) he purchased, as soon as permitted under the Share Dealing Code, BT shares to the value of at least £1 million; and (ii) as soon as practical after the purchase of the shares (the Invested Shares), the company would grant a share option over shares to the value of £1 million. So long as Sir Christopher is the legal and beneficial owner of the Invested shares on 1 May 2004, the option will become exercisable on that date.
^e In accordance with the terms of his service agreement, an option was granted to Ben Verwaayen on 11 February 2002. The option will become exercisable on the third anniversary of its date of grant subject to performance criteria being met.

Details of share options held at 1 April 2001 are as follows:

		Number of BTa shares under option 1 April 2001		Option exercise price per share		Usual date from which exercisable		Usual expiry dateb
Sir Iain Vallancec		57,957		333	p	09/03/95		09/03/02
		20,770		430	p	04/03/96		04/03/03
		3,760		375	p	08/12/97		08/12/04
Sir Peter Bonfield		6,460		267	p	14/08/01		14/02/02	b
R P Brace		24,890		430	p	04/03/96		04/03/03	c
		30,180		460	p	15/11/96		15/11/03	c
		23,470		375	p	08/12/97		08/12/04	c
B Cockburn		3,330		518	p	14/08/03		14/02/04	d
Total		170,817

^a   Shares in British Telecommunications plc.
^b   Sir Peter Bonfield exercised the option over 6,460 shares (adjusted to 7,194 shares as a result of the rights issue) at 240p per share on 15 August 2001. The market price of the shares on the date of exercise was 448p per share. In addition, compensation in respect of the September 1997 special dividend was paid, amounting to £3,000.
^c   Robert Brace exercised an option over 34,496 shares at 255p per share on 19 December 2001. This was in respect of an option granted in 1994 over 23,470 BT shares at an option price of 375p per share which was replaced by an option granted under the BT Group Legacy Option Plan (see note 34 to the financial statements). The market price of the shares on the date of exercise was 255p per share. His remaining options lapsed on 31 December 2001.
^d   Bill Cockburn's option under the BT Employee Sharesave Scheme lapsed on 30 September 2001.

Unrealised gains on the above share options at 31 March 2002, based on the market price of the shares at that date (280p), excluding the employee compensation for the special dividend which is discretionary in respect of directors' share options, were as shown below:

	Options exercisable			Options not exercisable
		Unrealised gains			Unrealised gains
	Number of shares	2002 £000	2001a £000	Number of shares	2002 £000	2001a £000
Sir Christopher Bland	-	-	-	314,244	-	-
B Verwaayen	-	-	-	1,121,121	339	-
Dr P Reynolds	1,483	-	-	4,555	3	-
A Green	567	-	-	-	-	-
Sir Peter Bonfield	-	-	-	6,460	-	16
Sir Iain Vallance	36,054	-	125	-	-	-
R P Brace	78,540	-	67	-	-	-
B Cockburn	-	-	-	3,330	-	-
a Based on options outstanding at 31 March 2001 and the market price of the shares at that date.

The market price of the shares at 31 March 2002 was 280p (2001 - 510p) and the range during the period from 19 November 2001 to 31 March 2002 was 216p - 290p. The range of market prices for a British Telecommunications share from 1 April 2001 to 16 November 2001 was 310p - 600p.

Details of the company's ordinary shares provisionally awarded to directors, as participants under the ESP and as awards of Incentive Shares and Retention Shares (see note 34 to the financial statements), are as follows:

						Total number of award sharesd		Range of value of award
	1 April 2001	Rights Issuea	Awarded	Vestedb	Lapsed	Demergerc	31 March 2002	Minimum £000	Maximum £000
Sir Christopher Bland	-	-	235,697	-	-	75,376	311,073	-	871
B Verwaayene	-	-	781,576	-	-	-	781,576	2,188	2,188
P Hampton	60,189	5,575	153,792	-	-	70,215	289,771	243	811
Dr P Reynoldsf	237,343	-	-	-	-	-	237,343	20	664
A Greenf	403,222	-	-	-	-	-	403,222	85	1,019
P Danonf	376,645	-	-	-	-	-	376,645	291	1,054
Sir Peter Bonfield	585,895	54,247	386,543	(189,575)	(27,084)	328,335	1,138,361	211	3,187
B Cockburn	99,592	9,219	-	-	-	34,798	143,609	-	402
R P Brace	201,273	18,629	-	(87,589)	(12,721)	38,246	157,838	127	442

^a   The Trustee sold sufficient rights to enable it to take up the remainder.
^b   The awards of shares under the ESP which had been granted in 1996, vested on 1 August 2001. The five year performance cycle for those awards ended on 31 July 2001 and on the basis of BT's TSR position, 85% of the shares under award subject to the performance measure, including reinvested dividends, vested.
^c   The restructuring resulted in the Trustee receiving one BT Group plc share and one mmO2 plc share for every British Telecommunications plc share held. The Trustee sold the surplus mmO2 shares and purchased further BT Group shares. The value of the awards was based on the average combined share price of BT Group plc and mmO2 plc shares over the 20 dealing days following the demerger on 19 November 2001 (see note 34 to the financial statements).
^d   Excluding shares purchased by each director and held under the ESP in Report on directors renumeration.
^e   In accordance with the terms of his service agreement, Ben Verwaayen was granted an award of 387,876 shares, with a value of £1 million under the RSP on 11 February 2002. A personal investment in BT Group shares to the value of £1 million was matched with a further award of Retention Shares with a value of £1 million, resulting in an award of 393,700 shares being granted on 11 February 2002. Both awards will vest on the third anniversary of their date of grant.
^f   The awards of Paul Reynolds, Andy Green and Pierre Danon are as at their date of appointment on 19 November 2001 and the year end.

In accordance with the terms of his service agreement, an award of 482,142 shares with a value of £1,350,000 under the RSP was granted to Ian Livingston on 20 May 2002. This award of shares will vest in three equal tranches on the first three anniversaries of his joining BT. In addition, Ian Livingston purchased 110,444 shares to a value of £300,000 on 20 May 2002 and a matching award of shares was granted to him under the RSP, which will vest on the third anniversary of the date of grant.

Details of awards of shares under the ESP and awards of Incentive Shares which would vest based on BT Group's TSR compared with the other companies in the FTSE 100 for the relevant performance period up to 31 March 2002 are as follows:

			31 March 2002		31 March 2001
	No. of shares under award	Expected vesting date	TSR position	Percentage of shares vesting	TSR position	Percentage of shares vesting
Sir Christopher Bland	311,073	2004	86	-	-	-
B Verwaayen	-	-	-	-	-	-
P Hampton	202,975	2004	86	-	-	-
Dr P Reynolds	47,019	2003	90	-	-	-
	144,649	2004	86	-	-	-
	18,304	2002	57	32.5	-	-
	11,409	2003	86	-	-	-
	11,388	2004	92	-	-	-
A Green	83,354	2003	90	-	-	-
	174,978	2004	86	-	-	-
	58,000	2002	57	32.5	-	-
	37,378	2003	86	-	-	-
	37,975	2004	92	-	-	-
P Danon	97,581	2003	90	-	-	-
	174,978	2004	86	-	-	-
Sir Peter Bonfield	266,743	2003	90	-	91	-
	510,159	2004	86	-	-	-
	114,493	2002	57	32.5	34	90
	110,456	2003	86	-	38	80
	98,351	2004	92	-	86	-
B Cockburn	76,467	2003	86	-	38	80
	67,142	2004	92	-	86	-
R P Brace	83,110	2002	57	32.5	34	90
	56,073	2003	86	-	38	80

The following deferred bonuses have been awarded to the directors under the DBP. These shares will normally be transferred to participants at the end of the three-year deferred period if those participants are still employed by the group.

							Market value
	1 April 2001	Rights Issuea	Awarded	Vested	Demergerb	31 March 2002	2002 £000	2001 £000
Dr P Reynoldsc	39,445	-	-	-	-	39,445	110	-
A Greenc	63,524	-	-	-	-	63,524	178	-
P Danonc	21,872	-	-	-	-	21,872	61	-
Sir Peter Bonfield	186,332	17,310	113,370	(27,620)	101,380	390,772	1,094	950
P Hampton	-	-	11,784	-	3,769	15,553	43	-
B Cockburn	33,232	3,087	-	(7,531)	9,207	37,995	106	169
R P Brace	14,650	1,360	-	(7,531)	2,712	11,191	31	75

^a   The Trustee sold sufficient rights to enable it to take up the remainder.
^b   The demerger resulted in the Trustee receiving one BT Group plc and one mmO2 plc share for every British Telecommunications plc share held. The Trustee sold the surplus mmO2 shares and purchased further BT Group shares. The value of the awards was based on the average combined share price of BT Group and mmO2 shares over the 20 dealing days following the demerger (see note 34 to the financial statements).
^c   The deferred bonuses of Paul Reynolds, Andy Green and Pierre Danon are as at their date of appointment on 19 November 2001 and the year end.

At 31 March 2002, Sir Christopher Bland, Ben Verwaayen, Philip Hampton, Pierre Danon, Paul Reynolds and Andy Green each had a non-beneficial interest in 73,069 shares (2001 - 97,578) purchased by BT Employee Shares Trustees Limited for allocation to employees under the BT Employee Share Ownership Scheme, and 24,571,130 shares (2001 - 19,144,802) held in trust by Ilford Trustees (Jersey) Limited for allocation to employees under the employee share schemes. Also, each had a non-beneficial interest in 45,286,908 shares held in trust by Royal Bank of Scotland (Jersey) Trustees Limited for allocation to employees under the BT Employee Sharesave Schemes.

Operating Committee
The aggregate remuneration of members of the Operating Committee (OC) and the former Executive Committee, other than directors, for services in all capacities during the 2002 financial year was as follows:

	2002 £000	2001 £000
Salaries and benefits	3,703	3,699
Annual bonuses	1,551	1,599
Termination and retention payments	1,276	97
Provision for long-term incentive awards	4,959	5,693
Company pension contributions	857	936
Total	12,346	12,024

The Operating Committee replaced the Executive Committee in February 2002.

Paul Reynolds, Andy Green and Pierre Danon, who were members of the Executive Committee, were appointed to the Board on 19 November 2001 and from that date their directors' salaries and their annual bonuses are reflected in the table by following this link.

Options over 5,650 shares under the BT Group Employee Sharesave Scheme were granted to an OC member during the 2002 financial year.
The members of the OC beneficially own less than 1% of the company's outstanding ordinary shares.

Directors' service agreements and contracts of appointment
The dates on which the Chairman's and each current executive director's initial service agreement commenced and the current expiry dates are as follows:

Chairman and executive	Commencement date of initial service agreement	Expiry date of current service agreement
Sir Christopher Bland	1 May 2001	a
B Verwaayen	14 January 2002	b
I Livingston	8 April 2002	c
P Danon	19 November 2001	d
A Green	19 November 2001	d
Dr P Reynolds	19 November 2001	d

^a   Sir Christopher Bland entered into a new service agreement on 19 November 2001, terminable on 12 months' notice by either the company or the director.
^b   The agreement is terminable during the first year by the company giving two years' notice and thereafter, by notice of not less than one year; terminable by the director on six months' notice ending after the first two years.
^c   Ian Livingston entered into an initial service agreement on 8 April 2002 for two years. The contract is terminable on 12 months' notice by the company and six months' notice by the director ending at any time after the initial period.
^d   The initial agreement is for one year and is terminable by the company on 12 months' notice and by the director on six months' notice ending after the initial period.

The dates on which 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
Sir Anthony Greener	1 October 2000	30 September 2003a
L R Hughes	1 January 2000	31 December 2002a
Baroness Jay	14 January 2002	b
J F Nelson	14 January 2002	b
C Symon	14 January 2002	b
M van den Bergh	1 September 2000	31 August 2003a

^a   Each director's contract of appointment was with British Telecommunications plc for an initial period of three years. On 19 November 2001 each director entered into a new contract with BT Group plc for the remainder of that period. The contract is terminable after that period by the company or the director on 12 months' notice.
^b   Each director's contract is for an initial period of three years and is terminable by the company or the director on three months' notice. The contract is renewable by mutual agreement.

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

Sir Anthony Greener
Deputy Chairman and Chairman of Remuneration Committee
21 May 2002