BT to claw back boss’s pay over Italian scandal

THE boss of BT could be forced to hand back some of his pay as part of the fallout from its £531m Italian accounting scandal.

Gavin Patterson, 49, earned £5.4m last year, including performance bonuses, but is likely to have to give some back after he admitted the problems in Italy were ‘far greater’ than previously identified.

Markets were stunned in January by BT’s admission that ‘inappropriate behaviour’ had caused it to exaggerate its profits in Italy for a number of years. The scandal drove a 37pc dent in BT’s third-quarter profit as it wrote off £531m and a wave of panic selling wiped almost £8bn off the company’s share price.

Now fund managers want payments to be adjusted, because BT bosses were rewarded for hitting targets that, it turned out, were not met.

It is up to BT’s remuneration committee to decide if and how much Patterson will have to pay back. But this is just the latest in a string of setbacks for the telecoms boss.

Last month, BT was fined a record £42m after it risked damaging British businesses by taking too long to deliver superfast broadband connections. It will also have to pay an estimated £300m in compensation to its rivals which were forced to provide a poor service to their customers because BT was too slow to connect them. Last month it was fined £880,000 by regulator Ofcom for continuing to charge former customers, delivering another black eye to the company’s reputation.

That penalty came just two months after BT’s EE mobile division was also fined £2.7m for overcharging customers. And BT’s poor customer service led to it being crowned the winner of Money Mail’s annual Wooden Spoon award – for the second year in a row.

This followed thousands of complaints about BT’s infrastructure arm Openreach, which it has since decided to spin off into a legally separate company.

One of BT’s top-ten shareholders told Bloomberg that investors were seeking adjustments to prior payouts. It is understood the board is considering clawbacks from management due to its revised financial results.

Analysts at Exane BNP Paribas said Patterson would likely see a significant drop in his bonus for the year that ended on March 31.

His total pay could be down as much as 70pc for the year. The company could also pull back about 20pc of last year’s bonuses, and they could trigger a lapsing of Patterson’s stock awards tied to financial performance and shareholder returns, the analysts said.

A BT spokesman said: ‘The BT Group remuneration committee will consider the implications of the BT Italy investigation.’