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| BT chief's pay package slashed by £4m over Italian accounting scandal | BT chief's pay package slashed by £4m over Italian accounting scandal |
| (about 1 hour later) | |
| The BT chief executive, Gavin Patterson, has had his pay packet cut by £4m after the company scrapped bonus payments following the £530m accounting scandal at its Italian operations. | The BT chief executive, Gavin Patterson, has had his pay packet cut by £4m after the company scrapped bonus payments following the £530m accounting scandal at its Italian operations. |
| Patterson will be paid £1.34m for the year to the end of March, mostly consisting of his annual salary of £993,000, a 74% reduction on the £5.28m he received for 2015/16. | Patterson will be paid £1.34m for the year to the end of March, mostly consisting of his annual salary of £993,000, a 74% reduction on the £5.28m he received for 2015/16. |
| BT also announced that it is to cut 4,000 jobs from its 102,000 global workforce, which will save it £300m over two years and which the company said will “offset market and regulatory pressures and support investment”. | BT also announced that it is to cut 4,000 jobs from its 102,000 global workforce, which will save it £300m over two years and which the company said will “offset market and regulatory pressures and support investment”. |
| The cuts, on which BT has taken a £300m restructuring charge, will come from areas including its troubled global services division. This is home to the Italian operation and triggered a profit warning in January over slow public sector and corporate IT sales. | The cuts, on which BT has taken a £300m restructuring charge, will come from areas including its troubled global services division. This is home to the Italian operation and triggered a profit warning in January over slow public sector and corporate IT sales. |
| BT said the division is now under strategic review with the goal of making it a “more digital business”. There has been speculation that it may be sold off, although BT has said it wants to try to turn it around before considering a sale. | |
| “As with any part of the business we review assets over time as to whether they still fit with out strategy or whether they are better owned by someone else,” said Patterson. “Global services is part of that [process].” | |
| Global services division chief Luis Alvarez is to stand down and will be replaced by Bas Burger, who has been at BT for nine years, most recently as president of its Americas operation. | Global services division chief Luis Alvarez is to stand down and will be replaced by Bas Burger, who has been at BT for nine years, most recently as president of its Americas operation. |
| BT’s remuneration committee, headed by former Sky chief Tony Ball, also punished ex-finance chief Tony Chanmugam, who saw his total remuneration plummet by 91% from £2.8m to £258,000 as a result. | BT’s remuneration committee, headed by former Sky chief Tony Ball, also punished ex-finance chief Tony Chanmugam, who saw his total remuneration plummet by 91% from £2.8m to £258,000 as a result. |
| Patterson and Chanmugan both said that they would not have accepted bonuses linked to the company’s performance if they had been awarded. | Patterson and Chanmugan both said that they would not have accepted bonuses linked to the company’s performance if they had been awarded. |
| “I believe as chief executive you need to set an example and so I signalled to the board back in January when we announced the [extent of the] problems in Italy I felt it would be inappropriate to take a bonus if one was due,” said Patterson in an interview. “As a chief executive you need to be setting an example for everyone across the business. Shareholders are disappointed in terms of what has happened in Italy in particular but they support the [overall] strategy.” | “I believe as chief executive you need to set an example and so I signalled to the board back in January when we announced the [extent of the] problems in Italy I felt it would be inappropriate to take a bonus if one was due,” said Patterson in an interview. “As a chief executive you need to be setting an example for everyone across the business. Shareholders are disappointed in terms of what has happened in Italy in particular but they support the [overall] strategy.” |
| Ball also pointed to issues in the last year including a £42m fine imposed on BT-owned Openreach, the largest ever imposed by the regulator, for issues including blaming broadband installation delays on factors beyond its control when this was not the case. | Ball also pointed to issues in the last year including a £42m fine imposed on BT-owned Openreach, the largest ever imposed by the regulator, for issues including blaming broadband installation delays on factors beyond its control when this was not the case. |
| “The past year has been challenging,” said Ball. “Although good progress has been made in a number of areas, unfortunately our performance has been significantly affected by the accounting irregularities in our Italian business, the issues that arose in Openreach ... the significant challenges we faced in the UK public sector and international corporate markets. The committee has made a number of difficult decisions this year in light of these circumstances and exercised its discretion accordingly.” | “The past year has been challenging,” said Ball. “Although good progress has been made in a number of areas, unfortunately our performance has been significantly affected by the accounting irregularities in our Italian business, the issues that arose in Openreach ... the significant challenges we faced in the UK public sector and international corporate markets. The committee has made a number of difficult decisions this year in light of these circumstances and exercised its discretion accordingly.” |
| BT also clawed back shares worth £338,398 awarded to Patterson and £193, 412 to Chanmugan under its incentive share plan for 2014/15, 2015/16 and 2017/18. | BT also clawed back shares worth £338,398 awarded to Patterson and £193, 412 to Chanmugan under its incentive share plan for 2014/15, 2015/16 and 2017/18. |
| The telecoms group also said that taking into account its lacklustre stock market performance over the last year, the level of the incentive share plan award for this year has been reduced from 400% to 350% of salary. | The telecoms group also said that taking into account its lacklustre stock market performance over the last year, the level of the incentive share plan award for this year has been reduced from 400% to 350% of salary. |
| “The remuneration committee will keep under active review whether any additional employees’ awards should be adjusted,” the company said. | “The remuneration committee will keep under active review whether any additional employees’ awards should be adjusted,” the company said. |
| BT reported a 19% fall in pre-tax profits to £2.3bn for the year to the end of March, and a 48% drop in its final quarter to £440m, which was broadly in line with its revised outlook issued in January. | |
| The company’s full-year dividend was up 10% to 15.4p but BT said that for the coming financial year it was reducing guidance. | |
| “Our dividend policy remains progressive but 2017/18 dividend growth will be lower than the 10% previously anticipated,” the company said. | |
| In January, BT saw £8bn wiped its stock market value as it admitted the Italian accounting scandal was far worse than initially thought and would cost £530m, not the £145m it had told investors. BT said that it spent £15m investigating the scandal in its final quarter to the end of March. The scandal cost BT’s European head, Corrado Sciolla, his job. | |
| BT said it will launch a consultation to explore the large-scale rollout of a “full fibre” broadband network. | |
| The UK, and BT as the owner of Openreach, has been criticised for failing to invest in an ultrafast network, leaving it lagging countries including Italy, Spain and Portugal. | |
| Openreach is consulting on a plan to potentially make ultrafast broadband, speeds of 1GB or more, to 10m homes by the middle of next decade. | |
| Currently, Openreach has only put what is termed as fibre to the home into less than 500,000 premises. | |
| “With the right conditions we could make full fibre connections available to as many as 10m homes and businesses by the mid-2020s, but we need to understand if there’s sufficient demand to justify the rollout, and support – across industry, Ofcom and government – for the enablers needed to build a viable business case,” said Clive Selley, chief executive of Openreach. | |
| BT is also consulting on a plans to bring faster speeds to “not spots” accounting for 3% of the UK that can’t get reasonable speeds of 10Mb or more. |