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BT chief executive Gavin Patterson to leave later this year BT chief executive Gavin Patterson to leave later this year
(about 2 hours later)
The BT chief executive, Gavin Patterson, is to leave the telecoms giant later this year after investors made it clear they had lost confidence in his ability to lead the company through an ambitious turnaround plan.The BT chief executive, Gavin Patterson, is to leave the telecoms giant later this year after investors made it clear they had lost confidence in his ability to lead the company through an ambitious turnaround plan.
In a surprise move, the company said it had already started the process of looking for his successor and expects to appoint a new chief executive in the second half of the year.In a surprise move, the company said it had already started the process of looking for his successor and expects to appoint a new chief executive in the second half of the year.
Jan du Plessis, the chairman of BT, thanked Patterson for his contribution over the last 14 years but said the company needed a change in leadership.Jan du Plessis, the chairman of BT, thanked Patterson for his contribution over the last 14 years but said the company needed a change in leadership.
He said: “The board is fully supportive of the strategy recently set out by Gavin and his team. The broader reaction to our recent results announcement has, though, demonstrated to Gavin and me that there is a need for a change of leadership to deliver this strategy.”He said: “The board is fully supportive of the strategy recently set out by Gavin and his team. The broader reaction to our recent results announcement has, though, demonstrated to Gavin and me that there is a need for a change of leadership to deliver this strategy.”
Investors welcomed the news, with shares rising 2.5% to 208p, making BT the top riser on the FTSE 100 and adding £400m to value of the firm. Investors welcomed the news, with shares initially rising 2.5% to 208p. When Patterson was appointed chief executive in September 2013, shares were trading at about 340p, before hitting a high of almost 500p in early 2016.
The departure comes after a backlash from shareholders over BT’s recent results and concerns that Patterson was not the right person to lead the company through an ambitious restructuring plan, unveiled by the chief executive only four weeks ago. Neil Wilson, the chief analyst at markets.com, said investors had “finally lost patience and driven him out”.
Wilson added: “There’s been more wrong than right for BT since he took over five year ago. It’s been a disappointing time for BT and for its shareholders.”
The departure comes after a backlash from shareholders over BT’s recent results and concerns that Patterson was not the right person to lead the company through an ambitious restructuring plan.
The strategy includes 13,000 job cuts and a move out of BT’s central London headquarters after almost 150 years as it attempts to slash costs amid growing competition and falling revenues. BT missed profit and revenue targets in the year to the end of March, sending shares in the company to a six-year low.The strategy includes 13,000 job cuts and a move out of BT’s central London headquarters after almost 150 years as it attempts to slash costs amid growing competition and falling revenues. BT missed profit and revenue targets in the year to the end of March, sending shares in the company to a six-year low.
Days after the news of the job cuts, BT revealed Patterson was paid £2.3m last year, including a £1.3m bonus and a 1.5% rise in his basic salary. Days after the news of the job cuts, BT revealed Patterson was paid about £2.3m last year, including a £1.3m bonus on top of his basic salary of £997,000.
Patterson, who has been at BT for more than 14 years and chief executive since 2013, will stay on in the top role until a replacement is found. At time of the strategy update last month, Du Plessis publicly endorsed Patterson as the person to steer the company through the changes but the position changed after the BT chairman held a series of conversations with shareholders.
He said: “It’s been an honour to lead BT since 2013 and serve as a member of the board for the last 10 years. Throughout that time I’ve been immensely proud of what we’ve achieved; in particular the transformation of the business in recent years, with the launch of BT Sport, the purchase and integration of EE and the agreement to create greater independence for Openreach. Patterson, who has been at BT for more than 14 years and was appointed chief executive in September 2013, will stay on in the top role until a replacement is found.
He will continue to be paid his usual monthly salary until his successor is appointed, after which point he will be entitled to up to 12 monthly payments covering his basic salary, benefits and bonus. Based on current projections that means he could walk away with about £2.3m, in line with his salary and bonus last year.
Patterson has led the company through a troubled 18 months that included an accounting scandal in Italy and a record £42m fine from Ofcom.
Patterson said: “It’s been an honour to lead BT since 2013 and serve as a member of the board for the last 10 years. Throughout that time I’ve been immensely proud of what we’ve achieved; in particular the transformation of the business in recent years, with the launch of BT Sport, the purchase and integration of EE and the agreement to create greater independence for Openreach.
“BT is a great business and with the new management team I’ve recently put in place, is, I believe, very well-positioned to thrive in the future.”“BT is a great business and with the new management team I’ve recently put in place, is, I believe, very well-positioned to thrive in the future.”
The chairman added: “While BT is a very demanding business, with multiple stakeholders, we do have significant opportunities ahead of us. I am confident that, for the remainder of his term, Gavin and his senior management team will continue to display the energy required to deal with every dimension of the task at hand.” George Salmon, an equity analyst at Hargreaves Lansdown, said the first half of Patterson’s tenure as chief executive had been positive, with the rise of BT Sport bringing some good times for investors.
“However, it’s been a different story over the last two years. Since 2016, BT’s share price graph resembles something of a black run; pretty much always on a downward trend and with a few nasty cliffs here and there.
“Ultimately, this is what’s behind the change. Shareholder confidence has followed the share price down and with BT embarking on a crucial restructure, the board has decided it’s time for a change.”
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