Thursday, 28 May 2009

Rewarding failure

A sign of the times. From the Guardian....

The boss of BT's corporate IT operation, where a dire performance has forced the telecoms company to axe 15,000 jobs and slash its dividend, pocketed more than £3.5m in his last year, reigniting the furore over rewards for failure.

The award for Fran├žois Barrault was branded as "outrageous" by union leaders and has forced BT to introduce a clawback scheme designed to prevent any director collecting a huge payout, despite the poor performance of their business, in the future.

Barrault was ousted in October last year as the dreadful performance of his business led to a monumental profit warning by BT. The company attempted to prevent him collecting his cash and shares but after taking legal advice was forced to admit that his contract allowed the payout.

10 comments:

Vodka drinker said...

BT - once the greatest and most innovative corporation in this country. It is a shadow of what it once was.

Jill said...

I hqve become numb to these stories:

Anonymous said...

Britain stinks up the nostrels with failure: failed PM, failed politicians, failed Labour Party, failed public services, even worse private sector, filthy, crime-ridden streets, obese, diabetic, brain-dead, alcoholic population: Americans have a term for this: massive fail. And Britain is it.

AntiCitizenOne said...

The whole "welfare" state is a reward for failure and paid out tens of billions in bonuses for failure last year. These failure bonuses are paid for by fining people who work productively or employ people productively.

Anonymous said...

Ahh - The Joy of Work.

Anonymous said...

Presumably this agreement was made during the boom times when you could make the argument about "paying for talent" with a straight face.

dearieme said...

"you could make the argument about "paying for talent" with a straight face": but I never heard it without issuing a horse laugh.

Mr Leatherhead said...

The bonus system for UK senior executives was a gadarine rush to grab a share of the debt fuelled boom. The legal small print in the executive compensation systems used by most UK companies is almost non existent & the design assumed continual boom
Good corporate governance used by a few savvy companies ensures that bonuses & share options remain company discretionary until the day of pay out. This sensibly protects against the legal lock in to pay rewards when the floor has dropped out of the global economy.
And then we come to the public sector bonus system.......good governance err what's that???

AntiCitizenOne said...

Mr Leatherhead,

This was due to the regulatory change that made Debt practically infinite by removing effective reserve requirements.

This changed lending from limited lending sorting by the best to unlimited lending scrambling for the biggest share.

Half The Story said...

Can you not be sacked for total incompetence these days?