BT chief quits early

Sir Peter Bonfield: 'Six action-packed years' at the helm

Sir Peter Bonfield, chief executive of BT since 1996, is to stand down one year early.

Sir Peter will leave the firm in January with a pay-off package of £1.49m ($2.17m).

It's been a hell of a ride - I really enjoyed it

Sir Peter Bonfield

"We have had our successes and have had our share of disappointments but we have seen some amazing changes in our industry and completed significant changes in BT," said Sir Peter.

BT's stock market value has shrunk 70% during the past 18 months of Sir Peter's reign.

Click here to see BT's share price over the past five years.

The former telecoms monopolist BT has now begun to look for a successor, saying that a new chief executive will be announced in due course.

Investor discontent

Some investors have blamed Sir Peter for bringing the firm into a cash crisis and for losing BT's position as the UK's leading telecoms firm.

Sir Iain Vallance, former chairman of BT, announced his resignation in April this year as criticism grew of a corporate strategy that landed BT with almost £30bn of debt.

He [Sir Peter] has pretty much messed up everything he has touched over the past six years

Erik Paulak
Telecoms analyst

Sir Peter was under pressure to leave at the same time for his part in the aggressive acquisition spree that landed BT in so much trouble.

And analysts have been highly critical of the management of BT.

"If you look at why Peter Bonfield is leaving early, it is because he has pretty much messed up everything he has touched over the past six years," Eric Paulak, head of research at telecom analysts Gartner told BBC News Online.

"The decisions both he and Iain Vallance made demonstrated that they had no idea how to run a telecom business."

Times of change

When new chairman Sir Christopher Bland took over in May, he extended Sir Peter's contract by a year, adding a hefty bonus if he stayed to oversee a radical restructuring of the company.

We took some risks, some of them paid off

Sir Peter Bonfield

That restructuring has happened faster than anticipated, bringing Sir Peter's departure forward.

"This is the right time to announce a change. We have almost completed the very radical transformation programme which we started last year," said Sir Peter.

Those changes include:

• The spin-off and rebranding of BT Wireless as MMO2;
• the sale of the directories business, Yell;
• the sale of assets in Japan and Spain for £4.8bn;
• a £5.9bn rights issue.

Sources say that the lack of a named successor suggest that BT might be looking for an external candidate.

Three internal candidates are tipped to be in the running: retail chief Pierre Danon, head of wholesale Paul Reynolds and finance director Philip Hampton.

Pay-off furore

Sir Peter will be paid one year's salary of £820,000, one year's on-target bonus of £615,000 plus the value of other benefits such as a car and health insurance of £50,000.

He is also entitled to extra pension contributions and the proceeds of his share options which, when they mature, could double his pay-off.

The pay-off attracted condemnation from unions at a time when telecoms firms are laying off staff.

"Yet another fat cat businessman takes another golden handshake at a time when telecoms companies are losing money hand over fist," a spokesman for the MSF union said:

"This cannot be right and the government must act to stop these outrageous pay-offs continuing."

Future plans

The 57-year old executive says he plans to stay involved in the technology-related business, but with a "broad portfolio of international interests".

He has long expressed a desire to move to the US, which he visits frequently.

BT's shares closed up 11p at 348p on Wednesday.

BT has suffered from the collapse of confidence in the telecoms sector as a whole, but has been particularly badly hit by investor fears over its corporate strategy.

BT stock peaked at £13.65 at the end of 1999.

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