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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 Combined
Code on Corporate Governance (the Code) and complied
with the Code.
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’s role is to set the remuneration policy
and individual remuneration packages for the Chairman,
the executive directors, members of the Operating
Committee (OC) and other senior executives reporting
to the Chief Executive. It also approves changes in
the company’s long-term incentive plans, recommends
to the Board those plans which require shareholder approval
and oversees their operation.
The
Committee met seven times during the 2003 financial
year. Sir Anthony Greener has chaired the Committee
since 18 July 2001. Other members of the Remuneration
Committee during the year were:
- Maarten
van den Bergh
- Louis
Hughes
- Margaret
Jay (appointed 5 November 2002)
- 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.
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, Group Finance Director; Alex Wilson, Group
HR Director (and his predecessor John Steele) and Larry
Stone, Company Secretary (and his predecessor Colin
Green), provided advice that materially assisted the
Committee in relation to the 2003 financial year. 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. Towers Perrin provides BT with a range of
data and advisory services covering all aspects of executive
pay, bonus arrangements, shares and benefits.
Remuneration
policy
This
part of the report is not subject to audit.
BT’s
executive remuneration policy is to reward employees
competitively, taking into account individual performance,
company performance, market comparisons and the competitive
pressures in the information and communication technology
industry. Base salaries are positioned around the mid-market,
with total direct compensation (basic salary, annual
bonus and the 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 proportion of the total executive remuneration
package is linked to line of business and corporate
performance. Remuneration arrangements and performance
targets are kept under regular review to achieve this.
Where
any significant changes are proposed to executive remuneration,
these are discussed with BT’s principal shareholders
and the main representative groups of the institutional
shareholders.
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