is BT’s policy to achieve for all our operations best
practice in our standards of business integrity. The
directors consider that BT has, throughout the year,
complied with the provisions set out in section 1 of the
2003 Combined Code on Corporate Governance.
Board, directors and board committees
Board is currently made up of the part-time Chairman,
the Chief Executive, four other executive directors and
seven independent non-executive directors. It is BT’s
policy that the Board will comprise a majority of
independent non-executive directors. The roles of the
Chairman and the Chief Executive are separate. The
non-executive directors provide a strong, independent
element on the Board. Sir Anthony Greener, the Deputy
Chairman, is the senior independent director.
Non-executive directors are appointed initially for
three years at the end of which the appointment may be
continued by mutual agreement. The Chairman and the
non-executive directors meet regularly without the
executive directors. The Chairman ensures the views of
shareholders are known to and appropriately considered
by the Board.
Board’s principal focus is the overall strategic
direction, development and control of the group. A
formal statement of its role is available on the
company’s website. Historically, the Board has met
every month, except August. For the 2006 financial year,
and going forward, the Board will meet at least nine
times each year.
summer 2004 the Board carried out a further evaluation
of its performance. A number of actions were agreed as a
result. As part of this process, the Chairman has
one-to-one sessions with the directors; the Deputy
Chairman, Sir Anthony Greener, meets all directors
individually to review the Chairman’s performance.
meet best corporate governance practice, Audit,
Remuneration and Nominating Committees have long been an
established part of BT’s system of governance. Each
committee has written terms of reference, which are
available on the company’s website. The Audit and
Remuneration Committees are made up entirely of
independent non-executive directors. The Board considers
that several of the Audit Committee’s members have
recent and relevant financial experience. The Audit
Committee reviews the company’s published financial
results, the Annual Report and Form 20-F and other
published information for statutory and regulatory
compliance and reports its views to the Board. It
recommends the appointment, reappointment and
remuneration of the company’s external auditors. The
Board has policies determining what non-audit services
the company’s external auditors can provide in order
to safeguard their independence and objectivity.
Nominating Committee ensures an appropriate balance of
experience and abilities on the Board, using this
evaluation to review the size and composition of the
Board and to recommend any proposed changes to the
Chief Executive, Ben Verwaayen, chairs the Operating
Committee, which meets weekly.
Internal control and risk management
Board is responsible for the group’s systems of
internal control and risk management and for reviewing
the effectiveness of those systems. Such systems are
designed to manage, rather than eliminate, the risk of
failure to achieve business objectives; any system can
provide only reasonable and not absolute assurance
against material misstatement or loss.
has processes for identifying, evaluating and managing
the significant risks faced by the group. These
processes have been in place for the whole of the 2005
financial year and have continued up to the date on
which this document was approved.