Joining a growing list of UK companies, BT has announced a pay freeze for all of its 85,000 U.K.-based staff; 20,000 overseas staff will be affected as well. The move is being blamed on the economic downturn and the company's need to cut costs.
Bonus payments to staff may be substantially lower or non-existent; BT's senior management have performance-related bonuses that in 2007-2008 were partially based on earnings per share and free cash flow. Since earnings are expected to fall in 2008-2009, bonuses should also decline.
BT's overseas staff of 20,000 will also be affected by the pay freeze, but arrangements will be affected by local laws in each country. BT's non-executive directors are also not covered by the freeze.
The company is in financial trouble due to substantial losses at BT Global Services and a looming pension payment of around $23 million.
For more:
- Financial Times story.
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