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8		9		10		11		12		13

8. Clayton Brendish ^{b d e}
Appointed to the Board on 1 September 2002. Previously executive deputy chairman of CMG. Other appointments: non-executive chairman of Anite, Close Beacon Investment Fund and Echo Research; non-executive director of Herald Investment Trust; trustee of Economist Newspapers and Foundation for Liver Research.

9. J Eric Daniels ^{c d}
A US national, appointed to the Board on 1 April 2008. Group chief executive of Lloyds TSB Group since 2003 and a director since 2001. He worked for Citibank from 1975 to 2000, becoming chief operating officer of Citibank’s consumer bank, then chairman and CEO of Travelers Life and Annuity following its merger with Citibank. After that, he was chairman and CEO of Zona Financiera before joining Lloyds TSB Group.

10. Rt Hon Patricia Hewitt MP ^{b f}
A British and Australian dual national, appointed to the Board on 24 March 2008. Labour MP for Leicester West, she was Secretary of State for Health from 2005 to 2007 and previously for Trade and Industry and Cabinet Minister for Women from 2001 to 2005. Before entering Parliament, she was director of research EMEA at Andersen Consulting (now Accenture) and deputy director of the Institute for Public Policy Research. A senior adviser to Cinven and a special consultant to Alliance Boots.

11. Phil Hodkinson ^{b*d e f}
Appointed to the Board on 1 February 2006. Formerly group finance director of HBOS. A Fellow of the Institute of Actuaries, he was formerly chairman of Insight Investment, Clerical Medical Investment Group, Halifax Financial Services and the HBOS Foundation. Other appointments: non-executive director of Business in the Community and Travelex, and a trustee of Christian Aid.

12. Deborah Lathen ^{c e}
A US national, appointed to the Board on 1 February 2007. A US attorney, president of Lathen Consulting. Formerly chief of the Cable Services Bureau at the Federal Communications Commission. She was previously director of national consumer affairs and managing counsel at Nissan Motor Corporation USA.

13. Carl G Symon ^{b c g*}
A US national, appointed to the Board on 14 January 2002. Formerly chairman and chief executive officer of IBM UK. Other appointments: chairman of HMV Group and Clearswift Systems; non-executive director of Rexam; an advisory board member of Cross Atlantic Capital Partners, and formerly a non-executive director of Rolls-Royce.

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Corporate Governance

Principal activities
BT is one of the world’s leading communications services companies operating in over 170 countries. A review of our business is given in the ‘BT in review’ section.

Corporate governance
We are committed to operating in accordance with best practice in business integrity, maintaining the highest standards of financial reporting, corporate governance and ethics. The directors consider that BT has, throughout the year, complied with the provisions set out in Section 1 of the 2006 Combined Code on Corporate Governance.

Board and board committees
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. 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 hold regular meetings without the executive directors being present. The Chairman ensures that the views of the shareholders are known to the Board and considered appropriately.
     The Board’s main focus is overall strategic direction, development and control. A formal statement of its role is available on BT’s website. The Board normally meets nine times each year.
     The Board carries out annual evaluations of Board and Board Committee performance and effectiveness.
      To meet best corporate governance practice, the Audit Committee, the Remuneration Committee and the Nominating Committee have long been an established part of BT’s system of governance. The Audit Committee is made up entirely of independent non-executive directors. The Board considers that members of the Committee have recent and relevant financial experience. The Audit Committee reviews BT’s published financial results, the Annual Report & 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 external auditors and ensures that key partners are rotated at appropriate intervals. The Board has policies determining what non-audit services the external auditors can provide, in order to safeguard their independence and objectivity.
     The Nominating Committee has agreed and reviews the combination of experience, skills and other attributes which the non-executive directors should bring to the Board, using this evaluation to recommend any proposed changes to the Board.
     The Equality of Access Board monitors BT’s compliance with the Undertakings made to Ofcom following Ofcom’s strategic review of telecommunications.
     The Chief Executive chairs the Operating Committee, which meets weekly.
     The Board also has a Committee for Responsible and Sustainable Business and a Pension Scheme Performance Review Group.
     The Audit Committee, the Remuneration Committee and the Nominating Committee, and the Equality of Access Board, have written terms of reference, which are available on our website at www.bt.com/committees

Internal control and risk management
The Board is responsible for the group’s systems of internal control and risk management and reviews each year the effectiveness of those systems. These 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.
     BT 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 2008 financial year and have continued up to the date on which this document was approved.
     BT’s management is responsible for establishing and maintaining adequate internal control over financial reporting for the group. Management has concluded that at 31 March 2008, BT’s internal control over financial reporting was effective.

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Summary report on directors’ remuneration

Introduction
This is a summary of the full Report on directors’ remuneration in the Annual Report, a copy of which is available on request or at www.bt.com/annualreport The full report will be voted on at the 2008 Annual General Meeting.

Remuneration Committee
The Remuneration Committee sets the remuneration policy and individual packages for the Chairman, executive directors and other senior executives reporting to the Chief Executive. It also approves changes in the Company’s executive share plans, recommends to the Board those plans which require shareholder approval and oversees their operation.

Remuneration policy for executives
BT’s executive remuneration policy is to reward employees competitively, taking into account individual line of business and Company performance, market comparisons and the competitive pressures in the global information and communications technology industry.
     The policy for executive pay, in general terms, is for base salaries to be consistent with market rates, with total direct compensation (basic salary, annual bonus and the value of any long-term incentives) to deliver upper quartile rewards for sustained and excellent performance.

Main components of remuneration
Executive benefits packages comprise a mix of basic salary and performance-related remuneration, as follows:

Basic salary
This is reviewed annually.

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of £700,000 in accordance with the terms of his contract and a bonus of £300,000 for his contribution in 2008/09. All his deferred bonus and incentive share awards will vest on cessation of employment. Ian Livingston has been appointed Chief Executive from 1 June 2008. He will receive a salary of £850,000 per annum.

Financial year 2008/09 policy
The Remuneration Committee carried out a review of executive remuneration and, as a result, resolved to place a greater emphasis on long-term performance-related reward. Incentive share awards with an initial value of 3x salary for the Chief Executive and 2.5x salary for executive directors will be awarded. The value of the annual cash bonus for the Chief Executive will be increased but the value of his deferred bonus will be reduced to 1x salary. The annual cash bonus for executive directors will also be increased but the value of the deferred bonus will remain at 75% of salary.
     Salaries have been increased to bring them within an acceptable market range. Ben Verwaayen’s salary will remain at £800,000, Hanif Lalani’s salary will be increased to £585,000, Ian Livingston’s salary will be increased to £850,000 on his appointment as Chief Executive and François Barrault’s salary will be increased to €850,000 (£654,000).
     For annual bonuses, the structure of the corporate scorecard has been revised. In addition to earnings per share, free cash flow and customer service (each at 30%), there will be a target (10%) relating to the individual’s contribution to the Company’s environmental, social and governance objectives.

Pension arrangements
Pensions are based on salary alone – bonuses, other benefits and long-term incentives are excluded. Those directors and other employees, who joined the Company prior to 1 April 2001, are members of the BT Pension Scheme, which is a defined benefit scheme. Hanif Lalani is a member of the Scheme but has opted out of future pensionable service accrual and the Company has agreed to pay an annual amount equal to 30% of his salary towards pension provision.
     Those executive directors who joined the Company after 1 April 2001 receive a cash allowance towards pension provision, some of which may be directed towards a defined contribution scheme on their behalf.

Other benefits
Other benefits include some or all of: company car, fuel or driver, personal telecommunications facilities and home security, medical and dental cover, special life cover, professional subscriptions, and tax planning and financial counselling.

Service agreements
The policy is for the Chairman and executive directors to have service agreements providing for one year’s notice by the Company. Sir Michael Rake, François Barrault, Hanif Lalani and Ian Livingston are entitled to salary and benefits until the earlier of 12 months from notice of BT’s termination of the contract or the director obtaining full-time employment.

BT’s total shareholder return (TSR) performance over the five financial years to 31 March 2008
		BT		FTSE 100
	1 April 2003 = 100
	Source: Datastream

Non-executive directors
Total payments to non-executive directors during the year were £574,000 (2007 – £528,000).
     At 1 April 2008, there were eight non-executive directors. Non-executive directors receive an annual fee of £60,000. There is an additional fee for membership of a Board committee of £5,000 per year and a further £5,000 for chairing a committee, with the exception of the Audit Committee, for which the membership fee is £10,000 and the additional chairmanship fee is £15,000. In addition, the membership fee for the Remuneration Committee is £10,000 and the chairmanship fee is £10,000.

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	Resolution 10 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.
	Resolution 11 That the directors be authorised to decide the auditors’ remuneration. This resolution follows standard practice.
	Special business The following resolution will be proposed as an ordinary resolution.
	Resolution 12 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 15 October 2009 and for that period the Section 80 Amount will be £127 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 £127 million (the Section 80 Amount) which is equal to approximately 33% of the issued share capital (excluding treasury shares) of the Company at the date of this Notice. See the notes to Resolution 14 for more information on treasury shares.
	The following two resolutions will be proposed as special resolutions.
	Resolution 13 That the authority and power conferred on the directors by Article 74 of the Company’s articles of association be:
	(a)	extended to any sale of shares which the Company may hold as treasury shares; and
	(b)	renewed until 15 October 2009; and for that period the Section 89 Amount will 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) at the date of this Notice, approximately 420 million shares; 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. Over a three year rolling period this disapplication will not exceed 7.5% of issued share capital. References to ‘allot’ in this note include the sale of treasury shares. The authorities sought by Resolutions 12 and 13 will last for 15 months until 15 October 2009, 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 14 That the Company be generally and unconditionally authorised to make market purchases (as defined in section 163 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 774 million shares;
	(b)	the minimum price (excluding expenses) which may be paid for each share is 5p;
	(c)	the maximum price (excluding expenses) which the Company may pay for each share cannot be more than the higher of:
		(i)	105% of the average market value of a share in the Company for the five business days prior to the day the purchase is made; and
		(ii)	the value of a share in the Company calculated on the basis of the higher of the price quoted for: (a) the last independent trade of; or (b) the highest current independent bid for, any number of shares in the Company on the trading venues where the purchase is carried out; and

	Register of Members and proxies
	Only shareholders on the Register of Members at 6.00 pm on 14 July 2008 are entitled to attend and vote at the AGM. As a shareholder entitled to attend and vote, you can appoint another person as your proxy to exercise all or any of your rights to attend, speak and vote at the meeting. You may appoint more than one proxy in relation to the meeting, provided you appoint each proxy to exercise the rights attached to a different share or shares held by you. A proxy need not be a shareholder of the Company. On a poll, the number of shares held by you as a shareholder at 6.00 pm on 14 July 2008 will decide the number of votes that you may cast.
	Nominated Persons
	Unless you are a shareholder you do not have a right to appoint any proxies under the procedures set out above, or referred to under the heading “AGM information” below.
	You may nevertheless have a right under an agreement between you and a shareholder of the Company who has nominated you to have information rights (‘Relevant Shareholder’):
	to be appointed, or to have someone else appointed, as a proxy for the meeting; or
	to give instructions to the Relevant Shareholder on the exercise of voting rights.
	If you are uncertain about your rights or about your investment you should contact the person or organisation that administers that investment.
	Shares
	The total number of issued and fully paid ordinary shares of 5p each at 14 May 2008, the latest practicable (business) date before the publication of this document, was 8,401,227,029. The total number of voting rights in the Company at that date was 7,744,377,765 (excluding treasury shares).
	By order of the Board
	Andrew Parker
	Secretary
	81 Newgate Street
	London
	EC1A 7AJ
	14 May 2008
	Documents
	Copies of all service contracts and contracts of appointment between the directors and the Company are available for inspection during business hours at the registered office of the Company on any weekday (but not on public holidays). They will also be available for inspection at the Annual General Meeting venue from 9.30 am on the day of the meeting until the end of the meeting.
	Your directors believe that the proposals in Resolutions 1 to 15 are in the best interests of shareholders as a whole 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.
	If you are not coming to the meeting Webcast
	The speeches by the Chairman, Sir Michael Rake, and our new Chief Executive, Ian Livingston, will be broadcast live on the internet at www.bt.com/btagm2008
	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. After the AGM you will be able to view a recording of the speeches.

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	AGM information
	If you are on the BT Group Register of Members at 6.00 pm on 14 July 2008:
		you have the right to attend, speak and vote at the Annual General Meeting; and
		if you are not attending the meeting, you may appoint someone else as your proxy or proxies to attend the meeting and/or vote on your behalf by post, fax, over the internet or by telephone.
	The number of shares you hold at the above register deadline will decide how many votes you or your proxy(ies) will have if there is a poll. For more information about appointing a proxy, please read the notes on the enclosed Proxy Card.
	Time and place of meeting
	Time – 10.30 am on 16 July 2008. Doors open at 9.30 am to the shareholder helpdesk, for questions and queries, and to the reception area which will include a display of BT’s services.
	Place – The Barbican Centre located at Silk Street, London EC2Y 8DS.
	Shareholders with disabilities
	The following facilities will be available
		sound amplification
		induction loop
		sign language interpretation
		Palantype speech-to-text transcription
	The Barbican Centre is wheelchair accessible. Parking spaces are available for disabled drivers. For advice and to book a space, call 020 7638 8891. Anyone accompanying a shareholder in need of assistance will be admitted to the meeting.

	Questions
	Shareholders will have the opportunity to ask questions before voting takes place on each resolution. If you wish to ask a question, please make your way to a question point where someone will help you.
		If you are coming to the AGM
		If you will be attending our AGM please can you call our Shareholder Helpline in advance on Freefone 0808 100 4141, (+44 121 415 7178 from outside the UK) or e-mail bt@equiniti.com using a subject header of “BT AGM 2008”, and quoting your shareholder reference number. We will send you details of how to get there.
	Joint shareholders
	If you are joint shareholders, all of you can attend and speak at the meeting. However, you will be entitled to vote there only if you are the first shareholder listed on the Register of Members.
	Corporate representatives
	If you are a corporate shareholder, and you are considering appointing a corporate representative, please refer to the recent guidance issued by the Institute of Chartered Secretaries and Administrators (ICSA) on proxies and corporate representatives – see www.icsa.org.uk The guidance includes a sample form of representation letter to appoint the Chairman as a corporate representative. Otherwise, you can contact our Registrars, Equiniti (see page 2).

	BT Group plc
	Registered office: 81 Newgate Street, London EC1A 7AJ Registered in England and Wales No. 4190816
	Produced by BT Group Designed by Greentarget, London Typeset by Bowne
	Printed in England by Howitt Printed on Revive 50:50 Silk, which is produced using 50% recovered waste fibre and 50% virgin wood fibre. All pulps used are elemental chlorine free (ECF).
	www.bt.com
	PHME 55429

Data Protection Statement

The Company (references to ‘Company’ include BT Group plc and British Telecommunications plc) collects and processes information provided by you, or on your behalf, which relates to you as an individual shareholder or as a participant in EasyShare or other scheme or plan. This information (which is your personal data) includes your name and contact details, the votes you cast and the Reference Number attributed to you by the Company. The Company may process your personal data for the purposes of compiling and updating the Company records, fulfilling its legal obligations, processing the shareholder rights you exercise, and contacting you with shareholder information and related communications. The Company may engage a third party to do this (for example our Registrars, Equiniti) who may process your personal data on the Company’s behalf.

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