BT Group rebuilds investor confidence

Directors scrap their bonuses

BT GROUP is clawing back management pay and eliminating 4 000 jobs as it seeks to rebuild investor confidence and overhaul the division involved in an accounting scandal in Italy.

The cuts involve scrapping bonuses for chief executive Gavin Patterson and former chief financial officer Tony Chanmugam for the 2017 fiscal year, BT said yesterday as it released fourth-quarter results that narrowly beat analysts’ estimates.

The company also reduced its outlook for 2018 normalised free cash flow and dividend growth.

Irregularities

Shareholders have been pushing the former British phone monopoly to adjust executive pay after it revealed in January that accounting irregularities in its Italian business were worse than expected.

This was leading BT Group to a larger write-down and was also contributing to a reduced profit outlook.

The scandal added to investor concerns over regulatory, investment and competitive pressures for BT, making it one of the worst-performing stocks in the FTSE 100 this year.

“I felt it was inappropriate to take a bonus,” Patterson said yesterday, immediately after the results.

Shareholders have been supportive in a challenging year, he said.

Patterson would have had the opportunity to earn a bonus of as much as 240 percent of his salary of £993 000 (R17.4 million) in fiscal 2017.

A reduction in deferred bonus plan share awards for the two executives totals more than £500 000.

The stock was down 3.2 percent as of 10.20am in London, at 301.90 pence.

The shares, which had 13 buy, 9 hold and 2 sell recommendations from analysts before the results, are down 17 percent this year, with only Centrica performing worse on the FTSE 100 Index.

The company said it would revamp the global services division that includes the Italy unit following a review.

Changes include replacing the division’s chief executive, Luis Alvarez, with Bas Burger.

The carrier will make the business more digital and less focused on owning local network assets around the world, which Patterson said could mean disposing of one or two units outside the UK.

The 4 000 job cuts will come from global services and BT’s technology, service and operations unit and the company will face a restructuring charge of about £300m over the next two years, BT said.

The carrier has more than 100 000 employees.

4 000 The number of jobs to be cut at BT Group