BT boss gets pay rise and £1.3m bonus two weeks after announcing 13,000 lay offs

If business leaders ever wonder why the British public hold them and what they do in such low regard, this company's annual report contains the answers

Two weeks after Gavin Patterson announced plans to slash jobs, the annual report details his pay rise and bonus (Reuters)

You decide to can 13,000 of your colleagues after a 2 per cent fall in underlying profits, a 1 per cent fall in revenues, and the expectation that the coming year isn’t going to be much better. What do you think the board will say when it comes time to discuss your annual bonus?

A. It doesn’t matter because I’m going to refuse one. I’m a leader. I make nearly £1m just in basic salary alone, and I need to at least pretend to share in the pain I’m doling out.

B. The remuneration committee will rightly recognise that the company’s performance over the past year hasn’t been good enough and if I’m honest they’re right. They’ll tell me they don’t think I should get a bonus and I’ll accept their decision.

C. I’m the CEO of BT and because of the way the targets have been set I’m due for a thumping pay out. I stand to make even more next year because they’re handing me a 2.5 per cent pay rise. Expectations are so low it won’t take too much to surprise on the upside either!

If you answered C, you must be Gavin Patterson. No wonder you’re always smiling.

Here are the figures, which are worth spending a little time mulling over if you’re planning to spend the evening running around the local park, or working up a sweat at the gym, because they ought to get you good and fired up.

Mr Patterson’s annual bonus rolled in at £1.3m in addition to that near seven figure salary he gets paid. Including benefits, but less £338,000 in share awards clawed back as a result of BT’s Italian accounting scandal, he ended the 12 months covered by the just released annual report with £2.3m in his pocket before tax, nearly £1m more than in the previous year.

The reporting period was described by remuneration committee chairman Tony Ball as “challenging”. He said that about the previous year too.

For those unfamiliar with corporate speak that translates as “pretty terrible”. This 2017/2018 year wasn’t quite as “challenging” as the previous year when the Italian scandal came to light. But terrible is as terrible does and you don’t have to take my word for it. You just have to look at the market’s verdict. The share price started that year at 438.6p. It finished it at 227.5p.

You really have to question how Mr Ball sees nearly doubling Mr Patterson’s overall package in a year during which the share price fell by nearly half represents aligning his interests with shareholders’ interests.

But they, in the form of the City’s big fund managers, seem unperturbed by the obvious flaws in his reasoning.

He was at pains to stress in his letter to investors that 96 per cent of them backed both the remuneration policy and the remuneration report at the 2017 AGM.

This sort of thing will keep happening while institutional investors continue to sit on their hands and ignore the interests of their clients like that.

If business leaders ever wonder why the British public hold them and what they do in such low regard, BT’s annual report contains all the answers they should need. Ditto the City.