In response to the voting outcome on Resolution 2 at the BT Group plc Annual General Meeting on 11 July 2018, this provides the following update to the statement made after the vote.
The Board was naturally disappointed with the overall voting outcome of 65.84% in favour of the 2018 Annual Remuneration Report. Following the vote, the Remuneration Committee Chairman invited a broad selection of shareholders and proxy advisory bodies to meet with him to understand their views on executive pay at BT and why some shareholders had felt unable to support the Remuneration Report.
These discussions highlighted that the primary concern of those shareholders voting against the resolution centred on the level of annual bonus paid to the Chief Executive. Despite the Remuneration Committee’s use of discretion to reduce the formulaic out-turn of the bonus for the financial year ending 31 March 2018, some shareholders felt that the amount paid did not appropriately reflect the underlying performance of the company or take adequate account of the value created for shareholders. Concerns were also expressed about the timing of the decision to pay this level of bonus given the announcement on 8 June 2018 that Gavin Patterson was stepping down as Chief Executive. On all other matters, the Remuneration Committee was pleased to hear that shareholders were supportive of BT’s remuneration policy.
We would like to thank shareholders for taking the time to engage with us and we have noted the feedback. While discretion is ultimately subjective, the Remuneration Committee will take steps to implement a more structured process to help it step through the application of its discretion in the future. This will include taking into consideration a broader range of performance factors and wider circumstances when coming to a decision on pay outcomes.
The Board remains committed to active shareholder engagement, the outcome of which will be reported in full to investors in our Annual Report & Form 20-F 2019. The Remuneration Report will be put to an advisory shareholder vote at the 2019 AGM in the usual manner.