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NOTICE OF MEETING

 

 

The 2006 Annual General Meeting of BT Group plc will be held at the Barbican Hall, Barbican Centre, Silk Street, London EC2Y 8DS, at 10.30 am on Wednesday 12 July 2006 to consider the following:

ORDINARY BUSINESS
RESOLUTION 1

That the accounts and reports of the directors and the auditors for the year ended 31 March 2006 be received.
Legislation requires the directors to present to the meeting these accounts and reports contained in the Company’s Annual Report.

RESOLUTION 2
That the directors’ remuneration report for the year ended 31
 March 2006 be approved.
The directors have to ask shareholders to vote on this report on directors’ remuneration. It is summarised in the Summary report on directors' remuneration. The full report, in the Annual Report, is on the Company’s website at www.bt.com/annualreport, or is sent to shareholders if requested.

RESOLUTION 3
That the final dividend of 7.6 pence per share recommended by the directors be declared payable on 11 September 2006 to holders of ordinary shares registered at the close of business on 18 August 2006.
The final dividend declared cannot exceed the amount recommended by the directors.

RESOLUTIONS 4-6: RE-ELECTION OF DIRECTORS
Under the Company’s articles of association (“articles”), in compliance with the Combined Code on Corporate Governance, all directors have to retire every three years at an Annual General Meeting. As a result, three directors must retire at this year’s Annual General Meeting and are proposed by the Board for re-election.

RESOLUTION 4
That Sir Anthony Greener be re-elected as a director.
Sir Anthony was appointed to the BT Board on 1 October 2000. He was appointed Joint Deputy Chairman and Chairman of the Audit Committee on 1 January 2001. He is the senior independent director. He became Deputy Chairman and Chairman of the Remuneration Committee on 18 July 2001 and is also a member of the Nominating Committee. He was formerly chairman of Diageo plc, the drinks and food group created by the merger of Guinness plc and Grand Metropolitan plc. Prior to completion of this merger, he was chairman and chief executive of Guinness plc.
     Sir Anthony is chairman of the Qualifications and Curriculum Authority and sits on the board of United Learning Trust.
     Aged 65.

RESOLUTION 5
That Maarten van den Bergh be re-elected as a director.
Maarten was appointed to the BT Board on 1 September 2000. He chairs the Pension Scheme Performance Review Group and is a member of the Audit, Remuneration and Nominating Committees. He is chairman of Akzo Nobel Supervisory Board and a non-executive director of British Airways and Royal Dutch Shell, and was chairman of Lloyds TSB Group until 11 May 2006. Prior to his retirement in July 2000, Maarten was president of the Royal Dutch Petroleum Company and vice chairman of its committee of managing directors from July 1998, having been appointed a managing director of the Royal Dutch Shell Group of companies in July 1992.
     A Dutch national, he is aged 64.

RESOLUTION 6
That Clayton Brendish be re-elected as a director.
Clay Brendish was appointed to the Board on 1 September 2002. He is a member of the Audit and Community Support Committees. Clay is non-executive director and external chairman of Meteorological Office Board; non-executive chairman of Anite, Close Beacon Investment Fund and Echo Research; a trustee of Economist Newspapers and Foundation for Liver Research and a non-executive director of Herald Investment Trust. Prior to his retirement in May 2001, he was executive deputy chairman of CMG having joined the board when it acquired Admiral.
     Clay was co-founder and executive chairman of Admiral, incorporated in 1979. He has also acted as an adviser to the Government on the efficiency of the Civil Service, working as an advisor to the Chancellor of the Duchy of Lancaster and the Office of Public Services on their respective Next Steps Agencies. Aged 59.

RESOLUTIONS 7-8: ELECTION OF DIRECTORS
The articles require any director appointed by the Board to retire at the Annual General Meeting following appointment.

RESOLUTION 7
That Matti Alahuhta be elected as a director.
Matti Alahuhta was appointed to the Board on 1 February 2006. He is a member of the Remuneration Committee. He has been president of Kone Corporation, one of the world’s largest elevator manufacturers, since January 2005 and a director since 2003. He worked previously at Nokia Corporation for more than 20 years, where his most recent roles were: executive vice president and chief strategy officer; president, Nokia mobile phones; and president telecommunications. He is foundation board chairman of the International Institute for Management Development (IMD), one of the leading global management schools, and chairman of Technology Industries of Finland Centennial Foundation.
     A Finnish national, he is aged 53.

RESOLUTION 8
That Phil Hodkinson be elected as a director.
Phil Hodkinson was appointed to the Board on 1 February 2006. He is a member of the Audit and Community Support Committees. He is group finance director of HBOS plc and chairman of Insight Investment. A Fellow of the Institute of Actuaries, he was formerly chairman of Clerical Medical Investment Group and Halifax Financial Services, and previously chief executive of Zurich Life and Eagle Star Life. He is a non-executive director of Business in the Community and chairman of the HBOS Foundation (the group’s charitable arm).
      Aged 48.

 

RESOLUTION 9
That PricewaterhouseCoopers LLP be reappointed auditors of the Company, to hold office until the conclusion of the next general meeting at which accounts are laid before the Company.

The resolution proposes the reappointment of PricewaterhouseCoopers LLP as the Company’s auditors.

RESOLUTION 10
That the directors be authorised to decide the auditors’ remuneration.
This resolution follows standard practice. If passed, the directors will decide how much the auditors should be paid.

SPECIAL BUSINESS
The following resolution will be proposed as an ordinary resolution.

RESOLUTION 11
That the authority and power conferred on the directors in relation to the Section 80 Amount by Article 74 of the Company’s articles of association be renewed until
11 October 2007 and for that period the Section 80 Amount shall be £137 million.
The articles give a general authority to the directors to allot unissued shares, which is subject to renewal by shareholders.
     The directors will be able to issue new shares up to a nominal value of £137 million (the Section 80 Amount), which is equal to approximately 33% of the issued share capital (excluding treasury shares) of the Company as at the date of this Notice.
     See the notes to Resolution 13 for more information on treasury shares.

     The following two Resolutions will be proposed as special resolutions.

RESOLUTION 12
That the authority and power conferred on the directors by Article 74 of the Company’s articles of association be:

extended to any sale of shares which the Company may hold as treasury shares; and
renewed until 11 October 2007;
and for that period the Section 89 Amount shall be £21 million.
This resolution renews the authority given to directors to allot equity securities without needing to offer these shares to existing shareholders first:
for cash, up to an amount representing approximately 5% of the issued share capital (including treasury shares) as at the date of this Notice; or
in connection with a rights issue – defined in summary as an offer of equity securities to shareholders which is open for a period decided by the Board – subject to any limits or restrictions that the Board thinks are necessary or appropriate.
   

There are no current plans to allot shares except in connection with the Company’s employee share plans. References to “allot” in this note include the sale of treasury shares.The authorities sought by Resolutions 11 and 12 will last for 15 months until 11 October 2007, although the directors intend to seek renewal of these powers at each Annual General Meeting.
     This will ensure that the directors continue to have the flexibility to act in the best interests of shareholders, when opportunities arise, by allotting shares.

RESOLUTION 13
That the Company be generally and unconditionally authorised to make market purchases (within the meaning of Section 163(3) of the Companies Act 1985) of shares of 5p each in the Company, subject to the following conditions:

(a) the maximum number of shares which may be purchased is 834 million shares;
(b) the minimum price which may be paid for each share is 5p;
(c)
the maximum price which may be paid for each share is an amount equal to 105% of the average of the middle market quotations of a share as derived from the London Stock Exchange Daily Official List for the five business days immediately preceding the day on which the share is contracted to be purchased; and
(d) this authority will expire at the close of the Annual General Meeting of the Company held in 2007, or if earlier, 11 October 2007 (except in relation to the purchase of shares, the contract for which was concluded before the expiry of this authority and which might be executed wholly or partly after that expiry).
The directors would like the Company to continue to have the flexibility to buy its own shares. This resolution renews the Company’s authority to buy its own shares in similar terms to previous years’ authorities. It would be limited to 834 million ordinary shares, representing 10% of the issued share capital (excluding treasury shares) at the date of this Notice. The directors would exercise this authority only after considering the effects on earnings per share and the benefits for shareholders generally.
     Shares purchased by the Company out of distributable profits may be held as treasury shares, which may then be cancelled, sold for cash or used to meet the Company’s obligations under its employee share plans.
     During the 2006 financial year, 166 million shares were purchased (1.9% of the share capital) for a total consideration of £360 million, at an average price of £2.17 per share. As at 17 May 2006, 22 million treasury shares had been transferred to meet the Company’s obligations under its employee share plans and as at that date, the Company still held 290 million treasury shares which is equal to 3.5% of the issued share capital (excluding treasury shares) in issue as at that date.
     The Company’s current intention is to hold any shares purchased as treasury shares but it retains the flexibility to cancel them or sell them for cash if it considers this to be in the best interests of the Company.
     The authority sought by this resolution will end by 11 October 2007, although the directors intend to seek renewal of this power at each Annual General Meeting.
      As at 17 May 2006, there were options outstanding over 465 million shares (of which options over 279 million shares were in respect of options granted under the savings related share option plans), representing 5.6% of the Company’s issued share capital (excluding treasury shares). If the authority given by this resolution were to be fully used, these would represent 6.2% of the Company’s issued share capital (excluding treasury shares). There are no warrants outstanding.
 

The following resolution will be proposed as an ordinary resolution.

RESOLUTION 14
That British Telecommunications plc, a wholly-owned subsidiary of the Company, be authorised to make donations to EU (European Union) political organisations, not exceeding £100,000 in total, during the period beginning with the date of the 2006 Annual General Meeting and ending at the conclusion of the day on which the 2007 Annual General Meeting is held.
The Company’s continuing policy is that no company in the group shall make contributions in cash or kind (including loans) to any political party. Arrangements are in place to implement this policy. However, the definition of political donations used in the Companies Act 1985 is very much broader than the sense in which these words are ordinarily used. It covers activities such as making MPs and others in the political world aware of key industry issues and matters affecting the Company, which make an important contribution to their understanding of BT. These activities are carried out on an even-handed basis related broadly to the major political parties’ electoral strength. The authority we are requesting in this resolution is not designed to change the above policy. It will, however, ensure that the group acts within the provisions of the Companies Act 1985 requiring companies to obtain shareholder authority before they can make donations to EU political organisations (which includes UK political parties) as defined in the Act. During the 2006 financial year, the Company’s wholly-owned subsidiary, British Telecommunications plc, spent £23,858.

Only shareholders on the Register of Members at 6.00 pm on 10 July 2006 are entitled to attend and vote. A shareholder entitled to attend and vote is entitled to appoint a proxy or proxies to vote on his or her behalf. A proxy need not be a shareholder of the Company. On a poll, the number of shares held by each shareholder at 6.00 pm on 10 July 2006 will decide the number of votes that the shareholder may cast.

By order of the Board

Larry Stone
Secretary
81 Newgate Street
London
EC1A 7AJ
17
 May 2006

Your vote is important. If you are not coming to the meeting you can cast your vote online, by telephone, by fax,
or by returning the proxy card

IF YOU ARE NOT COMING TO THE MEETING
Webcast
The speeches by the Chairman, Sir Christopher Bland, and the Chief Executive, Ben Verwaayen, will be broadcast live on the internet at www.bt.com/btagm2006 Questions and voting on the business of the meeting will not be broadcast. If you intend to view the webcast, you should visit this site before the meeting to check that you will be able to view it on your computer, and also whether you need any additional software.

DOCUMENTS
The following documentation, which is available for inspection during business hours at the registered office of the Company on any weekday (public holidays excluded), will also be available for inspection at the place of the Annual General Meeting from 9.30 am on the day of the meeting until the conclusion of the meeting:

(a)
the register of interests of directors (and their families) in the share capital of the Company;
(b)
copies of all service contracts and contracts of appointment between the directors and the Company; and
(c)
printed copies of the documentation made available to shareholders using electronic communication, including the Annual Report and Form 20-F 2006 and the Annual Review & Notice of Meeting 2006.
   
Your directors believe that the proposals in Resolutions 1 to 14 are in the best interests of both the Company and its shareholders and unanimously recommend that you vote in favour of all these resolutions. The directors intend to do so in respect of their own beneficial holdings.
 
Watch the webcast live on the internet at www.bt.com/btagm2006
 
 

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