BT lures Lucent boss with £7m package

Ben Verwaayen: BT has "exciting possibilities"

British Telecom has set out a £7m earnings package to attract a boss from US-based Lucent Technologies to be its new chief executive.

BT has revealed that Ben Verwaayen, a Dutch national, is to take over from Sir Peter Bonfield in February, ending a nine-month period of boardroom turmoil at the telecoms giant.

Ben Verwaayen's £7m package

Basic salary: £700,000 per year

Bonus: up to £910,000 per year

Share bonus: up to £910,000 per year

Initial share awards: £2m

Total over two years: up to £7.04m

Mr Verwaayen, currently vice-chairman at ailing telecoms equipment maker Lucent, will be paid £700,000 a year, with the prospect of adding a further £910,000 in bonuses, BT said.

A further incentive scheme could see him match his bonus in share options, taking his total package to a maximum of more than £5m over his initial two year contract.

He will also be awarded £2m worth of shares, with Mr Verwaayen, who is to sell all holdings in Lucent, to invest £1m of his own cash in BT.

The package is one of the highest offered to any UK boss, and comes at a time when chiefs at many failing firms are being dubbed "thin cats" for volunteering salary reductions.

But BT, which has come under flack for the package given to previous chief executive Sir Peter Bonfield, insisted Mr Verwaayen's package was strongly linked to BT's results under his stewardship.

"His total remuneration will be heavily leveraged towards performance," BT said.

Boardroom reshuffle

Mr Verwaayen's appointment ends a period of boardroom uncertainty sparked in April by the resignation of Sir Iain Vallance as BT chairman, following a collapse in the firm's share price and concerns over corporate strategy.

While, under the chairmanship of Sir Christopher Bland, BT has gained plaudits for easing a debt burden and retreating to core markets, question marks still remained over the future of Sir Peter Bonfield.

Sir Peter in October revealed he was standing down in January, after six years as chief executive.

Rumour mill

While finance director Philip Hampton had been widely tipped as being groomed as taking over as chief executive, he quit in October after reportedly clashing with Sir Christopher.

Candidates ranging from former Xerox Europe head Pierre Danon to Carlton boss Gerry Murphy were then seen as likely successors.

Investor reaction to Mr Verwaayen's appointment seemed downbeat, with BT shares falling 6.25p to 255p in late morning trade.

Lucent Technologies itself has had a troubled year, axing at least 20,000 jobs, and seeing merger talks with Alcatel collapse.

Mr Verwaayen had been heavily involved in setting up the talks, also visiting Siemens, Nokia and the then-buoyant Marconi on a European tour of potential merger partners, reports said.

He was a year ago reassigned as head of sales, marketing and services at Lucent as the firm sought to quicken decision making in the face of a troubled outlook.

'Great future'

Mr Verwaayen, who joined Lucent in September 1997 from Dutch telecoms operator KPN, said BT "undoubtedly has a great future".

"The company has such exciting possibilities going forward," he said.

BT chairman Sir Christopher Bland said Mr Verwaayen was "outstandingly well-qualified to lead the BT Group's strong executive team".

Mr Verwaayen, a fan of Arsenal football club, is married with two children, both of whom are studying in the US.