BT : Report on directors’ remuneration 2024

BT Group plc Annual Report 2024

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Report on directors' remuneration

As well as the usual annual decisions, a key task for the Committee this year was handling the change in Chief Executive and ensuring our approach took account of all relevant angles to support the ongoing success of the business. We also remained acutely aware of the cost pressures many of our colleagues face.

Ruth Cairnie

Chair of the Remuneration Committee

15 May 2024

Contents

Committee Chair's letter

Review of the year; Committee decisions; key outturns and plans for the year ahead - pages106 to109.

Focus on remuneration

The key aspects of our remuneration structure, outcomes for FY24 and implementation of the shareholder approved Directors' Remuneration Policy (Policy) in FY25 - pages110 to112.

Annual remuneration report

More detail on how we implemented the Policy during FY24 including the single figure table of remuneration for each director - pages113 to 121.

Remuneration in context

How we take account of remuneration conditions across the group and the environment in which the Committee makes it decisions on executive pay - pages 122 to 124.

Committee role

The Committee is responsible on behalf of the Board for:

• Determining the salary and benefits for the Chairman, Executive Directors, members of the Executive Committee and the Company Secretary, and monitoring remuneration practices and policies for the wider workforce
• Setting the performance targets for the annual bonus scheme for senior executives for the year ahead
• Determining awards under the annual bonus scheme and the group's long-term incentive plans for senior executives
• Reviewing and approving the Report on directors' remuneration
• Reviewing and approving the Policy including seeking shareholder approval, on a binding basis, at least every three years
• Ensuring that all remuneration decisions are made within the parameters of the approved Policy and align with our reward philosophy and our values. No senior executive is involved in any decision about their own remuneration.

The Committee's key responsibilities are set out in its terms of reference available at bt.com/governance

Committee membership and attendance

The Committee members are all Independent Non-Executive Directors. The Deputy Company Secretary is secretary to the Committee and he, or his delegate, attends all meetings and provides guidance, advice and support as required.

The Chairman, Chief Executive, Chief Human Resources Officer, Director of Group Reward and the Executive Remuneration & Policy Director are typically invited to attend meetings. They are not present when their own remuneration is discussed or in other circumstances where their attendance would not be appropriate.

Deloitte LLP, as the independent remuneration adviser to the Committee, also attends meetings.

The Committee held five scheduled meetings during the year and one ad hoc meeting. After each meeting, I reported back to the Board on the Committee's activities and the main issues discussed.

Meetings attended
Ruth Cairnie (Chair)a	4/4		Isabel Hudsonc	4/5
Ian Cheshireb	2/2		Matthew Key	5/5
Iain Connb	2/2

• Ruth joined the Board and the Committee on 6 April 2023.

• Ian and Iain stepped down from the Board and the Committee at the conclusion of the

AGM on 13 July 2023.

• Isabel sent apologies for one meeting due to a personal matter and provided comments on the papers to the Committee Chair in advance.

Tushar Morzaria joined the Board and the Committee on 7 May 2024.

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On behalf of the Committee I'd like to start by thanking Sir Ian Cheshire, the former Committee Chair, for a smooth handover and for securing shareholder support for our Policy at the 2023 Annual General Meeting (AGM). I intend to continue the work of the Committee by supporting our new Chief Executive and the executive team in realising the group's long term strategic goals.

This report sets out information on the Committee's activities during the year, our remuneration framework and its implementation. I've also provided further context on the performance of the business throughout the year and the environment in which the Committee made decisions on executive pay.

Stakeholder context

Wider workforce pay and conditions

As reported last year, we accelerated part of our 2023 pay review and delivered a £1,500 pay rise in January 2023 to support 85% of our UK colleagues (all of those earning a £50,000 full-time equivalent salary or below) during the cost-of-living crisis. This cohort received a further salary increase of at least 2.5% in September 2023, while a 5.5% budget was set for all other colleagues who had received no increase in January. Combined, therefore, all UK colleagues received at least 5.5% in 2023,

with our frontline colleagues receiving up to 10% and an average of 7.2%.

Further, as part of the September pay review, we also secured agreement with our unions for the 2024 review, bringing welcome certainty to both colleagues and the business. All UK frontline colleagues received a 4% increase in April 2024, while a 4% budget was available for our UK management population in June 2024.

Although inflation has fallen in recent months, the Committee understands that our colleagues continue to face cost pressures and it receives regular updates on pay and conditions across the business throughout the year. Isabel Hudson, as the Designated Non-Executive Director for Workforce Engagement, fed back any comments and sentiments on remuneration matters raised by the Colleague Board during the year. Maggie Chan Jones took on this responsibility during the year and the Committee will consult with Maggie to ensure these issues continue to be front-of-mind as it makes decisions on executive pay.

In 2022 we voluntarily committed to paying all our UK colleagues at least in line with the Real Living Wage and continue to do so. This year, we expanded our commitment to pay a fair living wage to direct employees in all countries in which we operate, in compliance with the Ethical Trading Initiative's Base Code #5.1. We're confident that we meet minimum wage requirements in all countries in which we operate. Almost 85% of our management colleagues are currently paid within or above their competitive market range, and we'll continue to focus on improving competitive pay positioning as part of our annual pay cycle.

Customer context

We accentuated our focus this year on our customers during challenging economic times, and achieved particularly strong NPS results in our Business and Openreach divisions. Customer experience remains a core pillar of our strategy, and a key part of our annual bonus scorecard for the coming financial year.

Shareholder context

Our share price performance over FY24 reflects the continued volatility in the wider market as well as the scale of the long term investment that we're undertaking. However, we remain confident in our longer term strategy and continue to deliver against it. We again paid dividends in FY24 and believe that we've appointed the right Chief Executive to realise our vision for BT Group, bringing longer term benefits for our shareholders.

Salary

2023 salary review

As outlined above, our annual salary review for senior management took place in September rather than June. Simon Lowth received a base salary increase of 5.5% in line with the minimum increase for UK senior management colleagues. As disclosed previously, Philip Jansen waived his right to any increase in his base salary which had been fixed for five years following his appointment.

2024 salary review

This year the annual salary review moves back to its usual effective date in June. UK managers are receiving an average 4% increase in salary, with an expected 2% minimum increase granted across the vast majority of our UK management population. There has been a particular focus on data-driven decision making, to target higher increases on those whose pay is less competitive versus market comparators. In line with this approach, Simon will receive a 2% increase in base salary.

Allison Kirkby's salary was set at £1,100,000 on appointment in February. No annual salary increase was awarded for 2024.

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Report on directors' remuneration continued

Annual bonus

FY24 annual bonus outcomes

For FY24, annual bonus performance was based on a scorecard of five key financial and non-financial measures that align to our strategic priorities. Financial performance accounted for 70% of the bonus scorecard and comprised the following measures:

• Adjusted EBITDA (35%) - despite ongoing macroeconomic challenges, we exceeded our target for the year and delivered £8.1bn in EBITDA.
• Normalised free cash flow (35%) - management of free cash flow was strong in-year, and we delivered NFCF of £1.28bn, above target and our guidance for the year.

Our non-financial measures accounted for 30% of the bonus scorecard and comprised the following measures:

• Customer (20%) - this year saw increased NPS scores, particularly in Business and Openreach. After a disappointing previous year, we made up ground during FY24 in a difficult environment, exceeding target in three of four quarters, and stretch in two of four. Across the full year, performance was between target and stretch.
• Inclusion, equity and diversity (10%):
• • Representation in senior management team (5%) - we've set ambitious and stretching diverse representation targets across BT Group, and this metric measures progress towards meeting them. Although we made significant progress in disability representation, and some improvement in representation of black and black heritage colleagues, we failed to meet our targets on gender. Overall, therefore, the outcome was between threshold and target for the year.
  • Inclusion index (5%) - defined as the average score across four key inclusion questions in our employee engagement surveys, this measure aimed to close the gap in inclusion sentiment for key under-represented groups. Unfortunately, the average gap in inclusion index score across these four groups increased from 4.6% to 5.9%, which did not meet our threshold target.

More information on the actions we are taking on inclusion, equity and diversity can be found on pages 31to 32. Further detail on the FY24 annual bonus scorecard outcomes can be found on page 114.

The overall formulaic outcome of the bonus scorecard was 129.2% of target. The Committee considered this result in the context of the wider performance of the business, the pace of our transformation to date, and the experience of our shareholders, and exercised its discretion to reduce the bonus payout to 110% of target.

Philip and Simon will therefore be awarded bonuses of £1,452,000 and £1,044,655 respectively. Half of Simon's bonus will be deferred into shares for three years.

FY25 annual bonus scorecard

The Committee has agreed that the current bonus scorecard remains aligned with our strategic priorities for the year, and accordingly no changes are proposed to the measures and weightings, other than minor tweaks in how inclusion and diversity are measured to ensure they remain fit for purpose.

The annual bonus plan remains subject to a health and safety underpin and, if triggered, the Committee retains the discretion to reduce the payout as it considers appropriate, including to nil.

No changes are proposed to bonus opportunities: on-target and maximum will remain at 120% and 200% of salary for both Allison and Simon, with 50% deferred into shares for a period of three years.

Long term incentives

Vesting of 2021 Restricted Share Plan awards

The Committee carried out an assessment of the two underpins applying to the 2021 Restricted Share Plan (RSP) awards (relating to ROCE performance and ESG/reputational damage) and determined that neither were triggered.

The Committee also assessed whether there was any evidence of windfall gains at the point of grant or vesting of these awards and concluded there was not. The Committee therefore agreed that the expected vesting value is appropriate.

All three tranches of the 2021 RSP awards will therefore vest in full in June 2024, 2025 and 2026 respectively. Tranches one and two remain subject to a holding requirement until June 2026.

Grant of 2023 RSP awards

The grant of our 2023 RSP awards was delayed from June until September in line with the annual salary review. Simon received an award at the normal Policy opportunity of 200% of salary, whilst Philip did not receive an award in light of him stepping down from the Board. Allison received an award upon appointment in February, granted at the normal opportunity and pro-rated to reflect that she joined part-way through the vesting period. All awards will be subject to both ROCE and sustainability underpins, details of which can be found on page 115.

The Committee considered the level of awards, mindful that the share price at the time of award was lower than at the time of the 2022 RSP award.

As set out elsewhere in this report, the group is undergoing significant change as the Board-approved plan to transform and grow the business is executed. In order to build the UK's leading networks and deliver for our customers, significant and ongoing long term investment is required. The Committee considers that the current share price reflects the position of the group in this strategic journey and that future share price increases will be as a result of management taking the right actions and consistently executing our strategy over the next three to five years, rather than as a result of a more general market recovery or windfall gain. The Committee therefore decided not to make any adjustment to the award level, but to review the value of the 2023 RSP awards at the time of vesting and use its discretion to adjust the outcome at that point, should it deem this to be appropriate.

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Grant of 2024 RSP awards

Both Allison and Simon will be granted an award of 200% of salary in June. As in prior years, these awards will vest in three equal tranches in June 2027, 2028 and 2029, with all tranches subject to a holding requirement until June 2029.

RSP awards will be subject to the same two underpins as the 2023 awards, measured over the initial three-year vesting period:

1. ROCE - average return on capital employed must be at least 7%a.
2. Sustainability - the business must have made sufficient progress over the vesting period towards meeting our sustainability commitments (this could include carbon emissions, carbon abatement and circularity).

Executive Director changes

Departure of Philip Jansen

Last July we announced Philip's intention to step down from the Board once a suitable successor had been identified. He stepped down as Chief Executive on 31 January 2024, and remains an employee of the group until 30 June 2024 during which time he will make himself available to Allison Kirkby on request to ensure an orderly and effective handover. He will continue to receive his contractual salary and benefits until this date.

In line with the Policy and the treatment of prior leavers, and in light of the fact that he has retired from executive life, the Committee elected to treat Philip as a good leaver. As a result, he will be eligible to receive a full-year bonus in respect of FY24, which will be paid in full in June 2024. Given his retirement, no deferral will apply, with the full bonus paid in June 2024.

Philip did not receive an RSP award in September 2023 as he had already announced his decision to step down. Outstanding shares under the RSP will be preserved, pro-rated for service, and will vest according to their normal schedule (subject to satisfaction of the relevant underpins). Outstanding shares under the Deferred Bonus Plan (DBP) will be retained fully and vest according to their usual timeframe.

Philip will also be required to maintain a minimum shareholding equivalent to 500% of his annual salary for two years post cessation of employment.

Appointment of Allison Kirkby

Allison transitioned from her role as a Non-Executive Director to Chief Executive on 1 February 2024. Allison will receive the same remuneration package as her predecessor, which is within the parameters of the Policy and aligned to the market for comparators of BT Group's size and complexity.

This includes an annual salary of £1,100,000, and on-target bonus opportunity of 120% of salary, with 50% of any bonus deferred into shares for a three-year period. Allison will also receive an annual RSP grant worth 200% of salary, and an award in respect of FY24 was granted in February pro-rated to reflect that she joined part-way through the vesting period. Subject to the satisfaction of the relevant underpins, the RSP awards will vest in three tranches after three to five years and be subject to a holding period until year five.

Full details of Allison's remuneration package can be found in the section outlining the planned implementation of the Policy for FY25 on page 112.

Chairman and Non-Executive Director (NED) fees

In line with the wider workforce increase and that offered to Simon, the NED base fee will increase from 1 June by 2%, the first increase in two years. For simplicity, the fee payable for membership of the Nominations Committee (which all NEDs receive) has been consolidated into the base fee. As Chairman, Adam Crozier waived his right to receive any increase.

Noting the changes to the structure and responsibility of our Board Committees that have been made this year, a full review of our Committee and additional responsibility fees was undertaken, to ensure they remain appropriate and market-competitive. These fees have not been increased since 2019, and accordingly the following was agreed:

• An increase from £14,000 to £25,000 for the Chair of the Responsible Business Committee, and an increase from £8,000 to £15,000 for members of said Committee
• An increase from £10,000 to £17,000 for the Designated Non- Executive Director for Workforce Engagement.

As always, the Committee and I wish to maintain an open dialogue on remuneration matters with our investors and I would welcome their comments or feedback, and support, at the forthcoming AGM.

Ruth Cairnie

Chair of the Remuneration Committee

15 May 2024

• ROCE is defined on page 48.

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Focus on remuneration

Our remuneration principles are to maintain a competitive remuneration package that promotes the long term success of the business, avoids excessive or inappropriate risk-taking and aligns management's interests with those of shareholders.

Below is how remuneration is aligned with the principles of the Code.

Clarity

• Our remuneration framework is structured to support the financial and strategic objectives of the group, aligning the interests of our Executive Directors with those of our shareholders
• We're committed to transparent communication with all stakeholders, including our shareholders
• The same annual performance framework applies to all our management colleagues, including Executive Directors, with aligned group and divisional metrics to ensure a consistent focus.

Risk

• Our incentives are structured to align with the group's risk management framework
• Three-yeardeferral under the annual bonus and a five-year release period on RSP awards create long term alignment, as do our in- and post-employment shareholding requirements
• The annual bonus, deferred bonus and RSP also incorporate malus and clawback provisions, and there is overarching Remuneration Committee discretion to adjust formulaic outcomes.

Predictability

• The long-term RSP reflects that we operate in a tightly regulated environment, ensuring a narrower but more predictable range of reward and performance outcomes to align with our business model.

Proportionality

• There is clear alignment between group performance, strategic progress, and remuneration outcomes for our Executive Directors
• Target total compensation levels are set competitively compared to other companies of similar size and complexity to ensure we can attract and retain the executives needed to deliver the business strategy
• Maximum total compensation levels are typically set lower than typical market practice to reflect the narrower and more predictable range of performance outcomes for BT Group
• Formulaic incentive outcomes are reviewed by the Remuneration Committee and may be adjusted after considering overall group performance and wider workforce remuneration policies and practices.

Simplicity

• We operate a simple but effective remuneration framework which is applied on a consistent basis for all colleagues
• The annual bonus rewards performance against key performance indicators, while the RSP provides long term sustainable alignment with our shareholders
• There is clear line of sight for management and shareholders.

Alignment to culture

• When considering performance, the Remuneration Committee takes account of BT Group's values
• The Remuneration Committee receives regular updates on remuneration practices and policies for the wider workforce, and colleagues may provide feedback to the Board via the Colleague Board and the Designated Non-Executive Director for Workforce Engagement
• Colleagues are encouraged to become shareholders in the business through the operation of all-employee share plans.

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Remuneration earned in FY24

Fixed pay Variable pay

£000

Allison Kirkby

Chief Executive

Philip Jansen

Former Chief Executive

Simon Lowth

Chief Financial Officer

				Allison Kirkbya		Philip Jansen		Simon Lowth
	£000	FY24	FY23		FY24	FY23		FY24	FY23
			Base salary	288	n/a	917	1,100	774	748
			Pension allowance	18	n/a	92	110	77	75
			Benefits	35	n/a	107	113	24	23
			Total fixed pay	341	n/a	1,116	1,323	875	846
			Annual bonus (shares)b	n/a	n/a		n/a	481	522	328
			Annual bonus (cash)	n/a	n/a	1,452	481	522	328
			RSP (shares)c	n/a	n/a	1,151	670	770	448
			Total variable payd	0	n/a	2,603	1,633	1,815	1,104
			Total	341	n/a	3,719	2,956	2,690	1,950

• Allison was appointed as Chief Executive from 1 February 2024. The FY24 base salary figure reflects Allison's total remuneration for the year representing £105,000 received as an Independent Non-Executive Director and £183,000 received as Chief Executive. Allison was not eligible for a bonus in FY24 and her first RSP

award was granted in February 2024.

• In line with the Policy, 50% of the annual bonus is

deferred into shares for three years. Philip's FY24 bonus will be paid fully in cash, with no deferral into shares.

• Both underpins have been satisfied for the 2021 RSP award and therefore all three tranches of the 2021 RSP award will vest in full in June 2024, 2025 and 2026 respectively. In addition, the second tranche of the 2020 RSP will vest in

August 2024. Further detail is set out on page 114.

• The total variable pay for FY23 for Philip and FY24 for Simon do not balance due to roundings.

Performance outcomes in FY24

Annual bonus FY24

• Bonus was subject to five measures of financial and non-financial performance
• Both financial metrics and NPS were above target for the year
• Our SMT representation metric finished the year below target while our inclusion index result missed threshold
• This resulted in a formulaic outcome of 129.2% of target. However, the Committee exercised its discretion to reduce the overall scorecard payout to 110% of target
• In line with the Policy, 50% of Simon's annual bonus will be deferred into shares for three years.

Measure and weighting (%)

Payout (% of max)

Adjusted EBITDA (35%)

Normalised free cash flow (35%)

Group Net Promoter Score (NPS) (20%)

SMT representation (5%)

Inclusion index (5%)

80%

92%

73%

53%

0%

2021 RSP

• A conditional share award subject to two underpins over the initial three-year vesting period.
• The Committee assessed the two underpins at the end of the restricted period and confirmed that both had been satisfied.
• Accordingly, all three tranches of the 2021 RSP award will vest in full in June 2024, 2025 and 2026 respectively. Tranches one and two are subject to a holding period until June 2026. Further detail is set out on page114.

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Focus on remuneration continued

Implementation of the Policy in FY25

		Fixed pay		Annual bonus		RSP
Allison Kirkby	Salary - £1,100,000	Maximum opportunity -	2024 award - 200% of salary
Chief Executive	Benefits	200% of salary
	Pension allowance -	Target opportunity -
	10% of salary	120% of salary
Simon Lowth	Salary - £791,405	Maximum opportunity -	2024 award - 200% of salary
Chief Financial Officer	Benefits	200% of salary
	Pension allowance -	Target opportunity -
	10% of salary	120% of salary
Performance	n/a	- Adjusted EBITDA (35%)	Awards subject to two underpins over
measures			- Normalised free cash flow (35%)	the initial three-year vesting period:
			- NPS (20%)	- Average ROCE must be at least 7%
			- Diversity and inclusion (10%).	- Sufficient progress is made towards
						meeting our sustainability
			An underpin applies which allows the		commitments.
			Committee to exercise its discretion
			to reduce the scorecard result if
			there is a significant breach in health
			and safety.
Framework	n/a	- 50% of any bonus payment for	- Awards vest in three equal tranches
				FY25 will be deferred into shares		after three, four and five years; no
				for three years		shares can be sold until year five
			- Malus and clawback provisions	- Malus and clawback provisions
				apply		apply
			- Full Committee discretion	- Full Committee discretion
				available.		available.

Directors' Remuneration Policy (Policy)

The Policy as approved by shareholders at the AGM on 13 July 2023 in accordance with section 439A of the Companies Act 2006 can be found online at bt.com/annualreport

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Annual remuneration report

This section summarises all elements of the directors' remuneration in FY24. References to 'audited' refer to an audit performed in accordance with UK statutory reporting requirements.

Single total figure of remuneration (audited)

The following table sets out all emoluments received by directors for FY24 and FY23.

Fixed pay

Variable pay

Basic salary

Benefitsa

Pensionb

Total

Annual bonusc

Long term

Total

and fees

fixed pay

incentives

variable pay

Total

£000

£000

£000

£000

£000

£000

£000

£000

FY24

FY23

FY24 FY23

FY24 FY23

FY24

FY23

FY24

FY23

FY24d FY23e

FY24 FY23

FY24

FY23

Chairman

Adam Crozier	700	700	11	12	711	712
Executive Directors

711 712

Allison Kirkbyf,i	288	125	35	8	18		341	133							341	133
Simon Lowth	774	748	24	23	77	75	875	846	1,045	656	770	448	1,815	1,104	2,690	1,950
Non-Executive directors
Ruth Cairnieg	161						161								161
Maggie Chan
Jonesh,i	99	8	35				134	8							134	8
Steven
Guggenheimerh,i	97	48	36	15			133	63							133	63
Isabel Hudsoni	147	146	2	1			149	147							149	147
Matthew Keyi	163	150	2	1			165	151							165	151
Raphael Kűblerj	0						0								0
Sara Welleri	140	138					140	138							140	138
Sub-total	2,569	2,063	145	60	95	75	2,809	2,198	1,045	656	770	448	1,815	1,104	4,624	3,302
Directors who left during the
year
Philip Jansenk	917	1,100	107	113	92	110	1,116	1,323	1,452	963	1,151	670	2,603	1,633	3,719	2,956
Adel Al-Salehl	0	0						0							0	0
Ian Cheshirem	44	155					44	155							44	155
Iain Connm	47	163					47	163							47	163
Total	3,577	3,481	252	173	187	185	4,016	3,839	2,497	1,619	1,921	1,118	4,418	2,737	8,434	6,576

• Benefits are provided in line with the Policy. For Allison, the figure includes one-off relocation costs to the value of £25,000. For Philip, the figure includes a company provided car and personal driver to the value of c. £79,000 (FY23: £86,000).

• Pension allowance paid in cash for the financial year - see 'Pension allowance' on page 114.

• Annual bonus shown includes both the cash and deferred share element for Simon. The deferred element of the FY24 bonus includes the value of deferred shares to be granted in June 2024. Further details of the deferred element are set on page 122. Allison will not receive a bonus in respect of FY24. Philip's FY24 bonus will be paid fully in cash, with no

deferral into shares.

• Value shown represents the estimated value of the second tranche of the RSP awards granted in 2020 and the first tranche of the RSP awards granted in 2021, that will vest in August and June 2024 respectively. The estimated value is based on a three-month average share price from 1 January 2024 to 31 March 2024 of 110.46p. Further details are provided on page 118. For the 2021 award, none of the value was attributable to share price appreciation over the vesting period. The Committee did not exercise any discretion in

relation to the vesting of the awards or share price change.

• The first tranche of the 2020 RSP vested in August 2023. The 2020 RSP value reported last year (£803,000 for Philip and £537,000 for Simon) was calculated on an estimated basis using the three-month average share price from 1 January 2023 to 31 March 2023 of 135.88p. The figures have been restated to reflect the actual share price on vesting of 113.43p. Further details are provided on page 118.

• Allison was appointed as a Director in March 2019 and became Chief Executive on 1 February 2024. The figure reflects Allison's total remuneration for the year representing

£105,000 received as an Independent Non-Executive Director and £183,000 received as Chief Executive.

• Ruth was appointed as a Director on 6 April 2023 and the figure represents her pro-rated remuneration during the year.

• Includes an additional fee for regular intercontinental travel to attend Board and Board Committee meetings in line with the Policy.

• Value shown relates to reimbursement of reasonable travelling and other expenses (including any relevant tax) incurred in carrying out their duties.

• Raphael was appointed as a Director on 30 January 2024. Under the terms of the Relationship Agreement between BT Group and Deutsche Telekom and Raphael's letter of

appointment, no remuneration is payable for this position.

• Philip stepped down as a Director and Chief Executive on 31 January 2024 and the figure represents his pro-rated remuneration during the year.

• Adel stepped down as a Director on 31 December 2023. Under the terms of the Relationship Agreement between BT Group and Deutsche Telekom and Adel's letter of appointment, no remuneration is payable for this position.

• Ian and Iain stepped down as Directors at the conclusion of the AGM on13 July 2023 and the figure represents their pro-rated remuneration during the year.

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Annual remuneration report continued

Additional disclosures relating to the single figure table (audited)

Salaries and fees

Executive Directors' salaries are reviewed annually, with any increases typically effective from 1 June. A 5.5% increase to Simon Lowth's salary was agreed from 1 September 2023 in line with increases for our UK senior management team, bringing Simon's salary to £791,405. Philip's salary of £1,100,000 was fixed for five years at the time of his appointment in January 2019. Allison was appointed as Chief Executive on 1 January 2024 and the Committee agreed a salary of £1,100,000.

Adam's annual fee has been £700,000 since his appointment as Chairman on 1 December 2021. His fee has remained at this level throughout the year as the Chairman volunteered to waive any fee increase during FY24.

The fees for Non-Executive Directors reflect Committee-related or other additional responsibilities, including on a pro-rated basis for any appointments during the year. A full breakdown of Non-Executive Director fees is set out on page 119.

Pension allowance

Executive Directors receive an annual cash allowance, which can be put towards the provision of retirement benefits.

All Executive Directors received an annual allowance of 10% of salary. This is aligned with the contribution rate available to the majority of our UK employees. We also provide death in service cover consisting of a lump sum equal to four times salary, and for Simon Lowth only, a dependants' pension equal to 30% of his capped salary.

Annual bonus

Philip and Simon were eligible for an on-target bonus in respect of FY24 of 120% of salary with a maximum opportunity of 200% of salary. Having joined as Chief Executive on 1 February 2024 and in accordance with the bonus plan rules, Allison was not entitled to a bonus for FY24. The annual bonus is based on performance against a scorecard of five key financial and non-financial measures linked to our KPIs as set out on pages 48to 49.

Category	Measure	Weighting	Threshold	Target	Stretch	Actual	Payout (% of max)
Financial	Adjusted EBITDA (£m)	35%	7,959	8,075	8,191	8,100	80%
	Normalised free cash flow (£m)	35%	1,072	1,188	1,304	1,280	92%
Transformation	Group NPS	20%	0	100	200	132	73%
scorecard
SMT representation (%)	5%	76.9	84.6	92.3	82.8	53%
	Inclusion index	5%	3.5%	2.3%	1.1%	6.0%	0%
Formulaic outcome						77.3% of max (129.2% of target)

For scorecard purposes, the EBITDA result assumes an on-target bonus payout for all colleagues. Actual post-bonus EBITDA for FY24 is £8,100m.

When determining the overall performance and bonus pay-outs, the Committee also considers a number of other factors including the wider performance of the business, share price performance, the external environment and overall affordability. Despite the formulaic outcome of the final bonus scorecard being 129.2% of target, the Committee exercised its discretion to reduce the outcome to 110% of target. The Committee believes this is a fair reflection of the overall performance of the business.

The final bonus outturns for Philip and Simon are set out in the table below:

	Formulaic outcome	Following discretion	% of max	Value
Philip Jansen	129.2% of target	110% of target	65.9%	£1,452,000
Simon Lowth	129.2% of target	110% of target	65.9%	£1,044,655

2021 RSP

The RSP is a conditional share award. Two underpins applied over the initial three-year vesting period:

• ROCE is equal to or exceeds the WACC over the same period
• there must have been no ESG issues which have resulted in material reputational damage for the group.

The Committee assessed performance against the two underpins at the end of the financial year and agreed that both had been satisfied.

As a result, all three tranches of the 2021 RSP award will vest in full in June 2024, 2025 and 2026 respectively. Tranches one and two remain subject to a holding requirement until June 2026.

BT Group plc Annual Report 2024

115

Corporate governance report

Awards granted during the year (audited)

2023 RSP

The 2023 RSP awards were made in September 2023 as set out below and on page 118. An RSP award was made to Simon Lowth in line with the normal Policy level. Despite serving as Chief Executive for almost a year of the performance period, no award was made to Philip Jansen on the basis of him stepping down as Chief Executive at the end of January 2024.

To reflect her joining part-way through the initial three-year vesting period, a pro-rated award was made to Allison Kirkby.

Director	Date of award	RSP award	Grant pricea	% of salary	Face value
(shares)	of award
Allison Kirkby	8 February 2024	1,484,942	107.00p	144	£1,588,889
Simon Lowth	7 September 2023	1,388,429	114.00p	200	£1,582,809

• The grant price is calculated using the average middle-market price of a BT Group plc share for the three dealing days prior to grant.

These awards are conditional share awards. Two underpins apply over the initial three-year vesting period:

• average ROCE must be at least 7%
• the business must have made sufficient progress over the vesting period towards meeting our sustainability commitments (which could include carbon emissions, carbon abatement and circularity).

Should one or both underpins not be met, the Committee may at its discretion reduce the number of shares vesting, including to nil.

Awards will vest in three equal tranches after three, four and five years, with an additional holding period such that no shares may be sold until year five. At vesting, additional shares representing the value of reinvested dividends on the underlying shares are added.

Malus and clawback provisions apply as set out in the Policy, and the Committee retains the ultimate discretion to adjust vesting levels to ensure alignment with our overall performance.

Details of all interests under the RSP are set out on page 118.

2023 deferred shares

In line with the Policy, 50% of the bonus awarded for FY23 was deferred into shares. The awards were made under the deferred bonus plan (DBP) in June 2023 as set out below and on page 118.

Director	Date of award	DBP award	Grant pricea	Face value of
(shares)	award
Philip Jansen	15 June 2023	343,782	140.00p	£481,294
Simon Lowth	15 June 2023	234,442	140.00p	£328,218

• The grant price is calculated using the average middle-market price of a BT Group plc share for the three dealing days prior to grant.

Deferred shares are not subject to performance conditions and have a three-year vesting period. At vesting, additional shares representing the value of reinvested dividends on the underlying shares are added.

Malus and clawback provisions apply as set out in the Policy, and the Committee retains the ultimate discretion to adjust vesting levels to ensure alignment with our overall performance.

Details of all interests under the DBP are set out on page 118.

Joining arrangements for Allison Kirkby

Allison transitioned from her role as a Non-Executive Director to Chief Executive on 1 February 2024. Allison will receive the same remuneration package as her predecessor, which is within the parameters of the Policy and aligned to the market for comparators of BT Group's size and complexity.

This includes an annual salary of £1,100,000, and on-target bonus opportunity of 120% of salary, with 50% of any bonus deferred into shares for a three-years. Allison was not eligible to receive a bonus in respect of FY24. Allison's RSP opportunity under the Policy will be 200% of salary. As outlined above, Allison was granted an RSP award in respect of FY24 in February 2024 pro-rated to reflect that she joined part-way through the initial three-year vesting period. Subject to the satisfaction of relevant underpins, RSP awards will vest in three equal tranches after three, four and five years and be subject to a further two-year holding period.

Allison will be subject to our shareholding requirement, being expected to build up a shareholding of 500% of salary within five years of the date of her appointment. This requirement continues to apply for two years post-cessation.