It doesn’t look to be smooth sailing for British Telecom’s outgoing boss, Gavin Patterson, as a recommendation to reject his bonus has arrived in time for the next shareholder meeting.
Leading proxy voting and policy advisor Institutional Shareholder Services (ISS) reckons that Patterson's near £1.3m bonus (a whopping 130 per cent of his salary) was "considered too large, in our view, for the level of performance".
The advisors pulled no punches, pointing that the share price had "fallen significantly" during the year - down 25 per cent - so giving the former CEO a wheelbarrow of cash to push through the door on his way out stuck in the craw somewhat.
ISS also had some words of warning around BT's appointment of KPMG following 34 years of PricewaterhouseCoopers as auditors. The advisors pointed to a report by the Financial Reporting Council (FRC) issued on 18 June stating an "unacceptable" decline in quality over the last five years. A few pointed questions with requests for assurances have been recommended.
Patterson's bonus plan had already taken a £338,000 hit last year, according to the advisors, following some deeply dodgy dealings in its Italian business, resulting in £530m being written off and Patterson being "deeply disappointed".
This disappointment now extends to his wallet.
The news will be of scant comfort to the 13,000 employees due to leave BT's hallways over the next three years following May's announcement, nor the 4,000 earmarked the previous year. Both "transformation" efforts were aimed at improving profitability and propping up a flagging share price.
CFO Simon Lowth received a nod in the report for his work in leading BT's pension review, although his Long Term Incentive Plan was still up for discussion due to "corporate performance coming at the lower end of guidance".
Lowth's work saw BT's defined benefit pension scheme shuttered at the end of May this year after tortuous negotiations with unions over the move. With the pension deficit at £14bn, accountants were keen to plug the hole. The CEO himself was paid £299,000 in pension contributions for the 2017/2018 financial year.
Clearly, the results have not been to the liking of analysts. BT Group's share price has plunged relentlessly over the last 18 months, from a near 500p peak at the end of 2016 to 217.5p at time of writing.
Sometimes failure does not bring its own rewards. ®
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