British Telecom is con-sidering a radical plan to give City analysts a hand in deciding the bonuses it pays to the bosses of its four new businesses.
On Thursday, the UK's third- largest company attempted to rid itself of its dinosaur image by announcing that it is to split its UK wholesale and retail fixed-line businesses into separate operations and float off Yellow Pages with a price tag of up to £10bn. BT is now considering linking the managers' bonuses to analysts' valuations of the new businesses. If introduced, the move will place considerable and unprecedented levels of power in the hands of the investment banks which evaluate the telecoms market.
According to the annual Primark Extel survey of the banks, the top five telecoms analysts are: Merrill Lynch, Warburg Dillon Reed, ABN Amro, Henderson Crosthwaite and Morgan Stanley Dean Witter.
A well-placed source said: "It's a pretty radical plan. If they decide to go with it then as far as I know it would be the first time a British company has placed so much emphasis on how it is perceived by analysts."
The final decision on how to remunerate the managers will be made at its annual general meeting, which will follow its results due out on 18 May. A BT spokesman said that before that date, any talk of the remuneration packages was "pure speculation".
BT's restructuring will see the creation of four new names. Yell, which will own Yellow Pages and related e-commerce businesses, will be run by John Condron. Ignite, run by Alfred Mockett, will concentrate on wholesale and corporate internet interests. BTopenworld, to be headed by Andy Green, will become BT's mass-market internet business. And BT Wireless, to be run by Peter Erskine, will combine BT's international mobile holdings including BT Cellnet.
As the dust settled on the announcement, analysts gave a cautious thumbs-up to the plan.
Eric Paulak, a telecoms specialist at Gartner Group, a technology research group, said: "There are two things here. It's a marketing exercise to gain attention. More importantly, there is a lot of sense in what it has done. Getting rid of its directory services is sensible as, in the long run, they make so much money in that area. Creating separate units for the profitable area gives the company much more focus."Reuse content