It is thought that new BT boss Ian Livingston will pocket much more money than his predecessor, Ben Verwaayen. Thanks to new changes in the telecoms company's boardroom pay policy, Mr Livingston will gain a substantial financial reward if he is successful in growing the business.
Mr Livingston will begin his new job on 1st July and according to the company's annual reports and accounts; he could earn around £7m in his first year by just hitting new performance targets. In comparison to this, Verwaayen was paid around £3.35m last year, which included a £1.5m deferred bonus.
But it isn't all bad for Verwaayen - the former boss will also receive a substantial termination payment of £700,000, as well as a £300,000 bonus for the current financial year. In addition to this, he will also get his deferred bonus shares, as well as a significant proportion of his long-term incentive shares if the company continues to perform well over the next month.
A BT spokesperson said that they were introducing changes to the chief executive's salary because despite "a period of relative success" the remuneration of BT's executive directors was below median.” The company said it had decided to change its remuneration policy after consulting with ‘key investors' to ensure that bosses got a bigger bonus if the company did well. The new scheme places emphasis on BT's long-term performance and the company's performance against its peer group.
The amount of total shareholder return, which considers things such as share-price performance and dividends, has an impact on Livingston's bonuses. In addition to this, the group's customer-service performance will also affect the amount of his annual cash bonus. The spokesperson said that the targets set for Livingstone were very high, but if the new boss hits them, he will be benefiting the company and its customers alike. The spokesperson said: "These are very stretching targets and if Ian hits them he will obviously do well, but shareholders will also have done well and customers will have benefited.”
If Livingston manages to hit these high targets, he will also be given £1.7m worth of BT shares as a reward, which he can collect as long as he remains with the firm. He could also be eligible for up to three times his salary, a massive £2.55m, in shares, which he can collect after three years with the company if they continue to perform well. The report indicates that Livingston will be paid a basic salary of £850,000, which £50,000 more than his predecessor.
This big-money plan will be a significant achievement for Livingstone, an ambitious Scotsman, who up to last year was paid only £1.4m in his role as head of BT's retail business.
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