Livingston's £1m bonus rings alarm bells amid BT strike threat

Published on Monday 24 May 2010 20:44

BT IS heading for a clash with unions tomorrow when its annual report is expected to reveal that chief executive Ian Livingston has been awarded a £1 million-plus bonus despite laying off 35,000 staff over the past two years.

The pay-out will be made public on the same day as one union that represents more than 50,000 BT staff will decide whether to ballot members on industrial action.

Members of the Communication Workers Union (CWU) are expected to take a dim view of the chief executive's award after the union was offered, and turned down, a 2 per cent pay deal for staff.

Andy Kerr, deputy general secretary of the CWU, said: "This is blatant double standards.

"Staff at BT have borne the brunt of the cost savings through redundancies, changes to pensions and a pay freeze.

"All we're asking for staff is a fair share of the profits as a pay rise. If it's good enough for the managers it should be good enough for the staff."

The pay offer rejected by the CWU included a guaranteed 250 bonus for staff plus a potential 250 "additional bonus".

The union Prospect, which has close to 30,000 members at BT, recently voted in favour of the deal. Prospect did not comment yesterday on Livingston's expected pay-out.

A spokeswoman for BT said: "The speculation is based on BT's improved performance for the year to 31 March 2010. Our annual report will be published on Wednesday."

The telecoms group recently unveiled 1 billion in profits for the year to the end of March, in contrast to a 134m loss a year earlier.

Livingston has been hailed by the City as a saviour ever since he took the helm from Ben Verwaayen in June 2008.

Two years ago, BT was forced to issue several profit warnings after its IT business, BT Global Services, failed to meet what analysts later described as vastly overoptimistic profit targets. The telecoms heavyweight was forced to write down more than 1bn on the unit, which provided IT networks for businesses. It also embarked on a severe cost-cutting programme, which included the loss of about 35,000 jobs.

Last year, Scots-born Livingston received a 343,000 bonus for improving the firm's customer service and green credentials but the surge back into profit it expected to see this year's pay-out exceed 1m. In theory, the chief executive is entitled to a maximum reward of 1.6m – double his 800,000 salary – if all financial targets are met.

The CWU will make a decision on the ballot at its annual conference in Bournemouth tomorrow, which coincides with the publication of BT's annual report. Around 40,000 managerial staff are also expected to be rewarded for BT's financial turnaround.

If CWU members were to vote in favour of industrial action at any potential ballot, they would trigger the first walk-out at BT since 1985, the year after it was privatised by Margaret Thatcher's government.