BT shareholders have bid farewell to chief executive Gavin Patterson by staging a protest over his £1.3m bonus at the end of a disastrous final year in charge.
At the telecoms giant’s AGM in Edinburgh more than a third of investors opposed its remuneration report, marking one of the biggest revolts against a FTSE 100 company so far this year.
Shareholder voting advisers had lined up against Mr Patterson’s bonus, which was awarded despite BT losing almost a third of its stock market value during the relevant financial year. The company struggled with the fallout from its accounting scandal in Italy, froze its dividend and saw trading deteriorate in multiple lines of business.
Institutional Shareholder Services, which can influence up to a quarter of the register of listed companies, warned the bonus was “too large, in our view, for the level of performance". An advisory service run by Hermes, which is part-owned by the BT Pension Scheme, also recommended a protest.
Some 34pc of votes were cast against the BT remuneration report. The vote is advisory only and even a majority would not require the company to take action.
However the scale of the protest puts the former public monopoly - one of Britain’s most widely held stocks - in the same invidious bracket as the housebuilder Persimmon and gambling operator GVC. All three FTSE 100 members have faced AGM pay protests by more than a third of their shareholders.
BT chairman Jan du Plessis, who sacked Mr Patterson in June under pressure from the City, weeks after he had unveiled a new strategy that included 13,000 job cuts, said he was “naturally disappointed” by the AGM rebuke.
A spokesman admitted Mr Patterson’s bonus was to blame and added: “We will engage further with our shareholders and proxy advisers to understand in full detail the reasons for their concerns and whether we should consider any changes to our longer term approach to remuneration.”
BT is not due to face a binding triennial vote on its remuneration policy, which sets the parameters for bonuses and other awards, until 2020. The policy was comfortably approved last year.
The company has defended paying Mr Patterson a bonus worth 1.3 times his salary on the grounds he achieved “stretching” targets on cash flow and customer service. In the prior year he received no bonus and earlier share awards were rescinded over BT’s failure to spot wrongdoing in Italy.
Tony Chanmugam, who was chief financial officer at the time, faced more clawback this year while Mr Patterson received no further sanction.
Mr Patterson remains BT chief executive while a search for his successor is under way. Mr du Plessis has insisted the company’s strategy will not markedly change although investor doubts remain over its dividend policy as pressure to invest more in fibre-optic broadband upgrades increases.
Prospect, the union that represents the BT managerial class that will bear the brunt of the job cuts, criticised the company at its AGM for reducing its investment in research and development.
National secretary Philippa Childs said: “At a time when the entire telecoms industry is changing these cuts – both in R&D and in staffing – could have a lasting negative impact on the future of the company.”
BT shares were little changed in afternoon trade, up 0.13pc at 227.7p.