CEO stepping down
‘We need a change’ says BT chairman as Patterson leaves
Gavin Patterson: salary boost came after job cuts were announced
BT chief executive Gavin Patterson is stepping down after the board decided there was a need for a change of leadership.
His departure later this year follows a backlash from shareholders over BT’s recent results,
A new CEO is expected to be in place during the second half of the year, which suggests the search for a successor has been under way for some time and may have been identified.
Mr Patterson, who has been with BT for 14 years – five as CEO – will continue in post until his replacement is in place.
The new strategy includes 13,000 job cuts and a move out of BT’s central London headquarters after almost 150 years.
The company is facing growing competition and falling revenues. It missed profit and revenue targets fr the year, sending its shares to a six-year low.
Days after the restructuring announcement, the company revealed Mr Patterson was paid £2.3m last year, including a £1.3m bonus and a 1.5% rise in his basic salary.
Jan du Plessis, Chairman of BT said: “Gavin has been with BT for just over 14 years and I want to thank him for his contribution to our business during that time, in particular during the almost five years that he has served as chief executive.”
“The board is fully supportive of the strategy recently set out by Gavin and his team. The broader reaction to our recent results announcement has, though, demonstrated to Gavin and me that there is a need for a change of leadership to deliver this strategy.
“To that end a number of concrete initiatives have already been launched and Gavin’s commitment to continue to lead the business during this transition phase will provide invaluable continuity.
“While BT is a very demanding business, with multiple stakeholders, we do have significant opportunities ahead of us. I am confident that, for the remainder of his term, Gavin and his senior management team will continue to display the energy required to deal with every dimension of the task at hand.”
Mr Patterson said: “It’s been an honour to lead BT since 2013, and serve as a member of the board for the last 10 years.
“Throughout that time I’ve been immensely proud of what we’ve achieved, in particular the transformation of the business in recent years with the launch of BT Sport, the purchase and integration of EE, and the agreement to create greater independence for Openreach.
“That, combined with the critical expansion of our superfast broadband network to 27m customers, and our stated ambition to reach 10m homes with ultrafast broadband by the mid-2020s have fundamentally repositioned the company.
“BT is a great business and with the new management team I’ve recently put in place, is I believe very well positioned to thrive in the future.”
For the remainder of his term as chief executive, Mr Patterson will continue to be paid on the same basis as disclosed in BT’s 2018 Annual Report, except that he will now not be receiving the 2018 Incentive Share Plan award described in the Annual Report.
When he steps down as chief executive, he will be paid strictly in accordance with the terms of his employment contract and BT’s remuneration policy, as approved by shareholders in 2017.
Russ Mould, investment director at AJ Bell said: ” “Shareholders in BT have lost 24% of the value of their investment in the telecoms giant since Gavin Patterson became chief executive on 10 September 2013, even after factoring in dividends. It’s therefore of little surprise that the board have finally decided to replace Patterson.
“The business has suffered from intense competition, a large pension deficit, a struggling global services business and regulatory pressures which forced it to cut landline prices. On top of that BT has had to contend with the prospect of political pressure to invest in faster broadband.
“Once an attractive income stock with decent dividend growth, BT has now put dividend growth on hold – something that will not have gone down well with already disgruntled shareholders.
“A new strategy is in place to revive the business but the board clearly feel Patterson is not the person to oversee turnaround efforts. The fact that BT’s share price went up on news of the CEO’s impending exit would suggest that investors and the market as a whole agree that new blood is required to rejuvenate what used to be a highly respected business.”