BT is handing its outgoing chief executive Ian Livingston almost £9m in bonuses before he takes up the unpaid role of trade minister in the coalition government.
The payout is in the form of shares he has accumulated through deferred bonus schemes at the telecoms group and comes on top of the £8.5m he received last year in salary, benefits and bonuses. He is also forfeiting shares worth about £9m as a result of his decision to join the government in November to replace Lord Green, the former chairman of HSBC.
The firm's remuneration committee – chaired by former Labour health secretary Patricia Hewitt, who receives £160,000 a year for her role – had decided to release the shares to him as a reward for his tenure at the company.
Major shareholders were told about the plan over the summer, along with the pay deal for his successor, Gavin Patterson, currently head of BT Retail, which sells broadband, calls and pay-TV under the BT and Plusnet brands.When his surprise appointment was announced in June, Livingston told the Guardian that he had already been "well rewarded" during his decade as a director of the company - and before the decision by the remuneration committee to allow him to take around half of its outstanding bonus awards.
The company said the remuneration committee, which will put its pay policies to a shareholder vote at next year's annual meeting, "felt it was appropriate for Ian to receive the … shares given the major contribution he has made to BT's turnaround in recent years".
The company said Livingston had presided over a revival in BT's shares, which have hit 12-year highs in recent days. Last night they closed at 342p – they were 75p when Livingston took the helm – and the value of the shares being released will increase along with any further rise in the share price.
The company is allowing him to take 1.8m shares he has received from a previous bonus, but which were yet to be released to him, and 800,000 shares from a 2011 bonus scheme under which he had originally been granted 1.3m shares. At last night's share price they are worth £8.9m.
He will not receive another 2.5m shares awarded to him under bonus schemes. His successor is to receive the same annual salary of £925,000 but have his bonuses structured in a different way. Patterson can receive up to 120% of his salary in annual bonus - compared with the 250% Livingston stood to receive - but another 400% if he meets "stretch" targets. Patterson, like Livingston, will receive another 30% of his salary - £270,000 - for his pension.
guardian.co.uk © Guardian News and Media Limited 2010