Bonfield could get pounds 550,000 BT bonus

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The Independent Online
Sir Peter Bonfield, chief executive of British Telecom, could gain long-term share bonuses worth almost pounds 550,000 for the 14 months since he joined the company, according to documents mailed to shareholders this week.

The information is revealed in the listing particulars sent to BT's 2.3 million investors giving details of the proposed pounds 13bn merger with MCI, the US long-distance phone carrier. They show that by 27 February Sir Peter, who moved to BT from computer giant ICL in January 1996, could be granted a maximum of 125,137 shares in the company depending on performance targets under the executive Long Term Remuneration Plan (LTRP).

Participants in the scheme, which has been criticised by large shareholders, have to wait five years before receiving the shares. Based on BT's share price of 437p during trading yesterday, Sir Peter's maximum award would be worth pounds 546,849. Sir Peter's minimum possible share award earned so far is 20,856 shares worth pounds 91,141.

The possible award comes on top of Sir Peter's basic salary, which rose by pounds 95,000 from January to pounds 570,000 and an annual cash bonus.

BT has denied speculation this week that some short-term bonuses, which are agreed this month by the executive pay committee, could be raised to as much as 100 per cent of basic pay to reflect the achievement of the MCI deal.

The LTRP began in September 1994, replacing an executive share option scheme which had run since BT privatisation. Members have to invest a percentage of their annual bonus, which then multiplies depending on how BT shares perform in the 100-share index.

The maximum award comes if BT shares are in the top 40 in the index over five years. It was intended to cover about 40 senior executives and by last month some 2.7 million shares had been allocated.

The other main beneficiary listed in the document is Robert Brace, finance director, who unlike Sir Peter joined the scheme at the outset. He stands to earn between pounds 132,647 and pounds 739,233 from the LTRP, which gives him between 30,354 and 169,161 shares, based on yesterday's share price. Sir Iain Vallance, chairman, is not a member of the scheme, although he has 237,883 share options outstanding from the previous scheme.

Anne Simpson, joint managing director of the shareholder advisory group Pirc, was one of the main critics of the LTRP. She said: "We advised clients at the annual meeting in 1995 that the scheme was too lenient. The performance targets were relatively low and the multiplier effect of the plan, we calculated, could give participants up to seven times their own investment in shares through a complex formula."

A BT spokeswoman defended the LTRP yesterday, claiming it was in line with industry best practice.

Separately, Sir Trevor Chinn, chairman of Lex Service, saw his total pay jump by 16.9 per cent to pounds 453,667 in 1996, according to the car dealership group's latest annual report and accounts.

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