Gavin Patterson will be retiring from his role as the BT Group’s Chief Executive after a major turnaround strategy failed to deliver the goods. Since the announcement of his departure, BT shares rose more than 2% in early trading.
Last month, as part of Patterson’s strategy, the company cut 13,000 jobs to address multiple pressures on the business such as increasing competition and falling revenues. Days after the cull, it was revealed that he had been paid about £2.3 million, which included a £1.3m bonus on top of his basic salary of £997,000.
Furthermore, under his leadership, the company saw a massive accounting scandal come to light, that had left a £530m cash black hole in its Italian business. This admission of fraud on his watch led to Patterson losing most of his 2017 bonus.
In March 2017, the company was handed a record fine of £42m from regulator Ofcom for delays in installing high-speed lines.
Failure to Hit Revenue Targets
On top of that, the failure to hit revenue target and a forecast for flat profits caused shares to tumble to a near six-year low.
The decline of the company’s shares and a plan announced last month to save 1.5 billion pounds per annum by 2020/21 left investors unimpressed.
Neil Wilson, the chief analyst at markets.com, said investors had lost patience with Patterson and had finally driven him out.
Patterson, who led the company for almost five years, was responsible for the launch and expansion of BT Sport, the £12.5bn acquisition of EE, and the separation of Openreach into an independent company.
Patterson, who has been with BT for 14 years, ten of which were as a board member, will remain in his post until his successor is chosen later this year and will continue to be paid his basic salary, benefits and bonus. Based on current predictions this could see him walk away with roughly £2.3m.
BT Chairman Jan du Plessis said:
“The broader reaction to our recent results announcement has … demonstrated to Gavin and me that there is a need for a change of leadership to deliver this strategy.”
“To that end, a number of concrete initiatives have already been launched and Gavin’s commitment to continue to lead the business during this transition phase will provide invaluable continuity.”
“While I am confident that, for the remainder of his term, Gavin and his senior management team will continue to display the energy required to deal with every dimension of the task at hand.”
Patterson said of his leadership:
“I’ve been immensely proud of what we’ve achieved, in particular, the transformation of the business in recent years with the launch of BT Sport, the purchase and integration of EE, and the agreement to create greater independence for Openreach.”
“That, combined with the critical expansion of our superfast broadband network to 27m customers, and our stated ambition to reach 10m homes with ultrafast broadband by the mid-2020s have fundamentally repositioned the company.”
“BT is a great business and with the new management team I’ve recently put in place, is I believe very well positioned to thrive in the future.”