BT bonus limit doubles to 100% of pay

Senior British Telecom directors are set to share in the company's most generous package of bonuses since privatisation, which could in theory give Sir Peter Bonfield, chief executive, a total pay-out of more than pounds 4m.

The short and long-term bonus schemes, detailed in the company's annual report sent to shareholders yesterday, represented BT's long-awaited move to put the pay of British executives on par with their counterparts in the US long-distance operator MCI, which the UK group is in the process of buying for pounds 13bn.

The most generous payouts are to be shared by Sir Peter, and Sir Iain Vallance, chairman, including one-off bonuses in recognition of their work to put the MCI deal in place.

Both executives, along with the finance director, Robert Brace, have raised their annual cash bonus limit from 50 per cent of salary to 100 per cent of salary from this year, giving Sir Iain and Sir Peter the potential to be "million pound men" for the first time.

Sir Peter will also receive a discretionary bonus on top of his annual bonus of up to pounds 500,000, payable over the next two years, if the merger goes through. The report showed Sir Peter's annual bonus for last year was pounds 225,000, representing 45 per cent of his pounds 498,800 basic salary last year. From this calendar year his salary rose to pounds 570,000.

Sir Iain was paid a "discretionary" bonus of pounds 185,000 last year in recognition of his contribution to the MCI deal, although he had not been actually part of the formal annual bonus scheme.

The payout came on top of a pounds 485,000 basic salary, taking his total pay including pensions benefits to pounds 698,900. From January this year Sir Iain's basic salary rose to pounds 500,000.

On 10 March Sir Iain wrote to The Independent denying he would receive a pounds 500,000 bonus, after a report suggested he could receive one for the last financial year. His letter continued: "There is no chance of my being offered a sum approaching pounds 500,000 as a bonus. Just for the record, if I were I would not accept it." It also emerged yesterday that the new contracts, with the higher bonus limits for next year, came into effect from 1 April.

A BT spokesman defended the awards and gave a "cast iron" guarantee that none of the three executives would actually receive their full 100 per cent bonuses, despite the changes to the scheme.

"Nobody, but nobody, gets more than their 50 per cent target bonus. Not even God could get a 50 per cent bonus. The 100 per cent figure is simply a contractual matter which is prevailing in other big companies at the moment."

The spokesman also said in practice that Sir Peter's two annual bonuses for this year would not exceed 100 per cent of salary, though in theory they could be worth more than pounds 1m.

On top of the proposed annual bonuses, BT unveiled a new long-term bonus package which could give Sir Peter up to six times his annual salary in shares and share options. Sir Colin Marshall, BT's deputy chairman and head of the pay committee, urged shareholders to vote in favour of the new scheme at the annual general meeting on 16 July.

The scheme, which would start from next April, has three elements. Executives can invest some of their annual bonuses in Concert shares, the new name for the merged group, which will be matched with one additional share for every three invested at the end of three years. In addition a share option scheme would provide options worth up to four times an employee's salary. The third scheme, called the "restricted share plan," gives Concert shares worth up to twice the basic salary.

Sir Peter is the only UK executive to share in all three schemes. BT said: "Peter Bonfield is chief executive of the fifth-largest UK company by market capitalisation and the fourth-largest communications company in the world. His pay does not figure in the top 10 of British chief executives. You cannot compare him with the fat cat league."

BT and MCI yesterday announced a $10bn loan facility for Concert with five US banks.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
Arts and Entertainment
Caroline Flack became the tenth winner of Strictly Come Dancing
tvReview: 'Absolutely phenomenal' Xtra Factor presenter wins Strictly Come Dancing final
Arts and Entertainment
The Apprentice finalists Mark Wright and Bianca Miller
tvBut who should win The Apprentice?
News
The monkey made several attempts to revive his friend before he regained consciousness
video
Extras
indybest
News
Elton John and David Furnish will marry on 21 December 2014
peopleSinger posts pictures of nuptials throughout the day
Sport
Brendan Rodgers looks on from the touchline
SPORT
Life and Style
A still from the 1939 film version of Margaret Mitchell's 'Gone with the Wind'
life
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Carlton Senior Appointments: Private Banking Manager - Intl Bank - Los Angeles

$200 - $350 per annum: Carlton Senior Appointments: Managing Producer – Office...

Carlton Senior Appointments: San Fran - Investment Advisor – Ind Advisory Firm

$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...

Sheridan Maine: Commercial Finance Manager

Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Sheridan Maine: Regulatory Reporting Accountant

Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Day In a Page

The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there
The 12 ways of Christmas: Spare a thought for those who will be working to keep others safe during the festive season

The 12 ways of Christmas

We speak to a dozen people who will be working to keep others safe, happy and healthy over the holidays
Birdwatching men have a lot in common with their feathered friends, new study shows

The male exhibits strange behaviour

A new study shows that birdwatching men have a lot in common with their feathered friends...
Diaries of Evelyn Waugh, Virginia Woolf and Noël Coward reveal how they coped with the December blues

Famous diaries: Christmas week in history

Noël Coward parties into the night, Alan Clark bemoans the cost of servants, Evelyn Waugh ponders his drinking…
From noble to narky, the fall of the open letter

From noble to narky, the fall of the open letter

The great tradition of St Paul and Zola reached its nadir with a hungry worker's rant to Russell Brand, says DJ Taylor
A Christmas ghost story by Alison Moore: A prodigal daughter has a breakthrough

A Christmas ghost story by Alison Moore

The story was published earlier this month in 'Poor Souls' Light: Seven Curious Tales'
Marian Keyes: The author on her pre-approved Christmas, true love's parking implications and living in the moment

Marian Keyes

The author on her pre-approved Christmas, true love's parking implications and living in the moment
Bill Granger recipes: Our chef creates an Italian-inspired fish feast for Christmas Eve

Bill Granger's Christmas Eve fish feast

Bill's Italian friends introduced him to the Roman Catholic custom of a lavish fish supper on Christmas Eve. Here, he gives the tradition his own spin…
Liverpool vs Arsenal: Brendan Rodgers is fighting for his reputation

Rodgers fights for his reputation

Liverpool manager tries to stay on his feet despite waves of criticism
Amir Khan: 'The Taliban can threaten me but I must speak out... innocent kids, killed over nothing. It’s sick in the mind'

Amir Khan attacks the Taliban

'They can threaten me but I must speak out... innocent kids, killed over nothing. It’s sick in the mind'
Michael Calvin: Sepp Blatter is my man of the year in sport. Bring on 2015, quick

Michael Calvin's Last Word

Sepp Blatter is my man of the year in sport. Bring on 2015, quick