Non executive directors:

Paul G Bosonnet (b) (c) Deputy Chairman
Michael Bett CBE Deputy Chairman
Sir Erie Ash CBE (a) (b) (c)
Sir Geoffrey Mulcahy (c) (d)
Yve M Newbold
Sir David Scholey CBE (b) (c)
The Rt. Non. Lord Tebbit CH PC (b) (c)

(a) Leaves the Board on 30 June 1993
(b) Member of Board Audit Committee
(c) Member of Board Committee on Executive Remuneration
(d) Appointed by HM Government Biographical details of the directors are set out in The Chairman's statement section.

• Sir Ewen Fergusson GCVO GCMG joins the Board on 24 May 1993 as a non executive director.

Corporate governance

The way in which companies are managed has become a matter of increasing public interest in recent years. The Report of the Committee on the Financial Aspects of Corporate Governance (the Cadbury Report), published last December, has focused attention on this important topic.

In response to the Cadbury Report, the company has reviewed its practices. In most respects, these already matched up to the recommended standards; in the others, the necessary adjustments have been made to procedures to ensure full compliance with the Report's Code of Best Practice, other than in respect of those parts of the Code on which guidance for compliance has not yet been given. BT's compliance will be subject to external audit next year.

How the Board works

The Board as a whole is responsible for policy and strategic matters. It comprises an executive Chairman, two non executive Deputy Chairmen and ten other directors, five of whom are non executive.

The non executive directors, drawing on their different backgrounds and wide experience, work with their executive colleagues to maintain a balance between the interests of the company's customers, employees and shareholders, and the community at large.

Subject to its general oversight, the Board has delegated many of its executive responsibilities to committees. Some Board committees also review appropriate issues before , they are presented to the Board. Membership of these committees is drawn variously from amongst the executive and non executive directors, and from senior managers within the business. The membership of certain committees is drawn exclusively from amongst the non executive directors.

Committees

Each of the Board's committees has clearly defined responsibilities and terms of reference. The most important of these committees are detailed below:

• The Board Audit Committee, chaired by the senior non executive Deputy Chairman (Mr Bosonnet) and consisting solely of non executive directors, reviews the financial accounts, accounting policies and practices, and gives particular attention to the need for these tocomply with statutory and regulatory requirements and best practice. The Committee also reviews the appointment and remuneration of, and reports presented by, the company's external auditors.
  
  
• The Board Committee on Executive Remuneration, also chaired by Mr Bosonnet and consisting solely of non executive directors, ensures that BT's senior executive remuneration, benefits and succession policies and practices are properly implemented and meet best practice criteria. The individual performances of the executive directors are assessed by the Committee against previously set objectives, and bonus payments are based on results against these objectives and on the performance of BT as a whole. No directors participate in decisions concerning their own remuneration arrangements.
  
  
• Other committees are responsible for examining and reviewing strategy, financial and operational performance, capital expenditure, investment decisions, major tenders and contracts, and community and charitable matters.

Pension fund

BT's main pension fund is not controlled by the Board, but by trustees, who are company and union nominees with an independent chairman. The trustees look after more than £13 billion in assets, which are held separately from those of the company. The pension scheme funds can only be used in accordance with its rules and for no other purpose.



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