Winter storms cost BT CEO £200,000 in bonuses

UK telecoms giant BT revealed in its recently published annual report that CEO Gavin Patterson (pictured) lost out on a quarter of his annual bonus due to missed customer service targets.

Patterson and Group Finance Director Tony Chanmugam get annual bonuses based on a percentage of their salary (£972,500 and £646,000 respectively). The proportion of their salary awarded is determined by a number of company and personal metrics shown in the chart below.

Patterson’s targeted bonus was 120% of his salary, with a ceiling of 240%.  He ended up only getting 109%, however, versus 139% last year, because BT missed the customer service target that makes up a quarter of the award. 20% of Patterson’s salary is around £200,000 so that’s a decent chunk of change he dropped.

Two thirds of the customer service measure is based on Right First Time, BT’s key internal measure. “It tracks how often we keep the promises we make to our customers,” said the annual report. “Our performance in the first quarter of the year was good. But in the second, third and fourth quarters, our service was impacted by electrical storms and system and network outages, as well as 11 separate winter storms over a five-month period.

“The storms resulted in record levels of flooding and while we received much praise for our response, they had a significant impact on our service. We recovered well in the fourth quarter and ended the year with a positive upturn in our service measures. But we missed our RFT target for the year as a whole. Performance was down 3.0% against a 4.7% increase in the prior year. We need to redouble our efforts into next year as we know that we need to do much better.”

BT is already under significant pressure to improve the service it offers its wholesale customers through Openreach, so it’s safe to assume customer service will be a major priority for Patterson in the coming year.