Connected Research

Union policy research in the 21st century

BT board pay

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The publication of the full BT Report and Accounts for 2008/09 brought with it details of the company’s remuneration policy towards its executives: a move which will be of great interest to Connect members this week given what is happening to the 2009 staff pay review.

The press have had something of a field day: see, for instance, The Guardian here and here. The company’s granting last June of a 700,000 Euro ‘retention award’ to Francois Barrault, former head of the company’s troubled Global Services unit, only to be followed four months later by asking for his resignation, accompanied by a handsome pay-off worth £1.6m, was perhaps not the smartest of things to do. The company’s former chief executive, Ben Verwaayen, whose departure looks to have been done with Teflon timing, also pocketed a £300,000 cash bonus in respect of his two months work for BT this year as well as a contractual termination payment of £700,000, even though he left the company voluntarily. BT executives also received the usual range of fees and allowances the presence of which is, in times other than these, somewhat less remarkable.

Such excess is an easy target, however. The serving set of executives appear to have adopted, if not quite sackcloth and ashes, then at least the appearance of a, perhaps relative, ascetism: the second stage of previously agreed wage rises (in 2007/08) to take executives to the ‘market rate’ (interesting notion, this one) is being deferred in the light of the ‘current difficult market and trading conditions’, while increases in on-target bonus levels due this financial year have been put back; the bonuses that are being paid (to three executives) are being paid not in cash but in the company’s shares, which have been experiencing a rather declining value relative even to that of other shares; and Hanif Lalani, the company’s former finance director who replaced Barrault at Global Services in October, has declined any bonus at all.

The accounts contain an interesting reference to executive remuneration taking into account the pay and employment conditions of employees elsewhere in the group: a reference, no doubt, to the pay freezes being put in place for staff. Nevertheless, it is only a partial reference. Being paid in shares or no, the three other executives (chief executive, finance director and Retail director) are still receiving a formal annual bonus, in addition to deferred share-based incentives, not the ‘recognition awards’ being paid, outside Global Services and on a reduced (compared to bonuses in previous years) and currently rather opaque basis, to Connect members. Subject to continued employment in three years time, those deferred bonuses which have been granted to executives this year will also become available. So there are still different rules for the select few, then.

Shareholders will be voting on the remuneration report at the AGM on 15 July.


Written by Calvin

28/05/2009 at 10:48 pm

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