REWARDS FOR FAILURE AT BT
PRESSURE was mounting on BT yesterday, after the struggling telecoms giant revealed that the former head of its loss-making Global Services division (BTGS) received a pay packet totalling £2.85m in 2008.
Ahead of the company’s annual general meeting in July, shareholders said Francois Barrault’s annual package – which included a £1.59m termination pay off – was a “payment for failure”.
“Many shareholders will be dismayed,” said UK Shareholder Association spokesperson Roger Lawson. “Voting against their remuneration at the AGM is certainly something we could look at.”
Barrault resigned as chief executive of BTGS – which supplies telecoms services to the government and multinational companies – when it made the first of two profit warnings last October, admitting that a number of contracts were less profitable than expected.
Earlier this month, BT confirmed the worst when it posted a fourth quarter pre-tax loss of £1.28bn, on the back of a £1.3bn write-down at BTGS, and said that it would axe 15,000 jobs this year, in addition to 15,000 last year.
On top of the £1.59m pay-off, Barrault received remuneration worth £1.26m, including a retention bonus and relocation allowances.
“We were disappointed at having to make this payment,” said a spokesperson for BT, “but we had to honour our legal and contractual obligations.”
But investor advisory body PIRC said that shareholders deserve an explanation for why BT is “spending any shareholder money compensating the head of an underperforming division for the loss of his job”.
Former BT chief executive Ben Verwaayen, who was at the helm when the loss-making contracts were signed, left the group with a £700,000 payout and a £300,000 bonus.
BT’s existing chief executive Ian Livingston earned £1.2m in the year. He picked up a bonus of £343,000 in shares, based on personal performance measures.
BT’s shares are trading more than 30 per cent lower than when the company floated at 130p in 1984.