KPN cuts chairman's pay

KPN has cut debt - and jobs

Dutch telecoms group KPN has cut the pay of its top executives in the hope of smoothing talks with its unions.

The firm said its chairman will give up a bonus package worth up to 11m euros ($12.8m; £7.6m).

The unions had threatened to take the company to court, saying that big pay deals for bosses were unfair when costs were being cut and staff laid off to cope with the firm's heavy debts.

KPN said it would put the money saved towards funding new broadband projects.

It said it hopes the pay talks due in a week's time with the unions will now proceed more smoothly following the cuts.

'Stagnating'

At the most basic level, the change of plan means chairman Ad Scheepbouwer will give up a guaranteed bonus of half a million euros a year.

The 11m euros he would get if he were to leave following a takeover has also now been ditched.

The ADVAKABO union, which had threatened the court case, had described the severance pay for both Mr Scheepbouwer and his fellow boardmembers as "a golden handshake for failure".

"In a stagnating economy, the unions have been urged to apply wage restraint," the company said.

"They have great difficulty accepting this call upon them because of the high levels of remunertaion for senior executives.

"KPN has sought to clear the air on this subject."

The company's severance policy will now follow a new - and much less generous - Dutch code for corporate governance now under development, dubbed the Tabaksblat code.

KPN has struggled with a heavy debt burden following the telecoms boom of the 1990s.

After sinking into the red once the bubble burst in 2000, it finally managed to return to profitability late last year.