BT chief executive Ian Livingston's annual earnings have risen to £8.5m, boosted by a rise in the company's share price which will also see 1,000 managers share windfall payouts averaging £120,000.
Having overseen a 50% rise in BT's market value in the last year, Livingston has been granted shares worth £6m from the scheme, which was designed as a reward for a three-year turnaround plan. His managers have received £120m from the pot of 38m shares, which was distributed following annual results last week.
"BT's remuneration policy is based on reward for success," a spokesman said. "The company has more than one million shareholders and they have benefited from healthy dividends, as well as a share price which has more than doubled over three years."
Livingston's bonus and the number of shares awarded were lower than last year, but because of the increase in BT's share price, his overall package has risen from the previous £7.7m total.
He waived a pay rise for the second year in a row, taking home a base salary of £925,000, although his cash in lieu of pension contributions has risen to £270,000, £50,000 more than last year.
The chief executive's cash bonus was £1.196m, effectively equal to his salary plus pension money, and he received a further £21,000 in other benefits which range from a company car to home security.
In addition, if Livingston is still chief executive of BT in three years, he will take possession of shares worth more than £2m at current prices.
BT will adopt government proposals on executive pay in 2014. These include binding shareholder votes and publishing a single figure for each executive's total pay. The firm's remuneration committee is chaired by former Labour health secretary Patricia Hewitt, who receives £160,000 a year for being a BT board member.
"Executive remuneration remains a lively and often controversial issue," she wrote in the annual report, published on Thursday. "The committee has kept closely in touch with developments, recognising that this is a key issue for investors, employees and other stakeholders."
During his tenure, Livingston has initiated a £2.5bn investment to replace copper broadband lines with fibre cables, serving two thirds of the UK population by 2014.
Earlier this month, the company kicked off what analysts expect will be a pay TV price war by launching two sports channels that will broadcast Premier League games free to those customers who already take BT broadband. The move has boosted BT's shares, while denting those of rival pay TV companies BSkyB and TalkTalk.
Livingston has also tackled BT's ballooning pension deficit, and kept costs under control at its global services division, which secures telecoms contracts from government organisations and large companies.
When Livingston joined in June 2008, global services was in trouble after signing too many unprofitable contracts. By March 2009, it had plunged to a £2bn operating loss. The division is still on a knife edge, but managed to report a £3m profit this year.
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