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Wednesday, 18 July, 2001, 17:31 GMT 18:31 UK
BT shareholders rebel over director pay
British Telecom graphic
Long-suffering shareholders finally rebelled at the British Telecom annual general meeting on Wednesday and put their confidence in the board to a vote.

Shareholders were not just angry because shares have lost 40% of their value in the last year but also at the decision to freeze dividends while proposing a hefty pay rise to directors.

As the board attempted to pass a proposed executive remuneration package, a simple show of hands was not enough.

One angry shareholder rose to the resolution, raised his voice for all to hear and called for a "poll".

After a few minutes of puzzled looks, BT chairman Sir Christopher Bland responded to the floor.

"I'm advised that the poll has been validly called," he said.

BT shareholders argued that if investors are to be deprived of their dividend then they should be able to vote on boardroom pay.

Shareholder discontent

BT stock has fallen by two thirds over the last year as the telecoms sector has fallen victim to the global economic downturn and the huge cost of third-generation mobile licences.

Shareholder dividends were scrapped as BT laboured under a 30bn debt burden rung up in a buying spree for global mobile assets.

Now, to balance its balance sheet, it is being forced to sell the very mobile assets that cause the debt burden and break itself up.

The company also recent reached for the begging bowl to ask shareholders for another 5.9bn in a new share issue to pay off its debt.

All's well

BT claims it is regaining financial health, that its debts are under control and forecast that the uncertain outlook in the telecoms industry would pass.

"Our debt was far too high, but we have taken drastic and very successful action to reduce it," said Sir Christopher, who was appointed chairman at the start of May.

He added that BT debts stood at 17.5bn at the end of June, down from 27.9bn at 30 March, 2001, due to the disposal programme and the rights issue.

Sir Christopher replaced Sir Iain Vallance, who stepped because of shareholders complaints about the financial state of the company.

Shareholders were also hostile to the re-election of two directors, Iain Anderson and Sir John Weston, at the meeting and called another poll.

Shareholders voted on the two resolutions at the end of the meeting and a result is expected to be revealed on Friday or next Monday.

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