BT chief is set to earn £2.8m this year

BEN Verwaayen, chief executive of BT, could be in line for a 60% pay rise this year to £2.8m as the company attempts to tie him in for the long term.

With Sir Christopher Bland stepping down as chairman in 2007, BT said it wants to preserve management continuity and is bringing pay packages in line with the UK's top 30 listed firms.

Verwaayen's basic for the April-March financial year remains frozen at £700,000, but his bonus - capped at 300% - could reach £2.1m. Last year, Verwaayen earned £1.736m of a total potential package of about £2.3m.

However, BT pointed out that two-thirds of the bonus will consist of deferred shares, which Verwaayen will be able to cash in only after three years and only if he is still at the firm.

'It's the most performance-related package BT has had in its history,' said a spokesman. 'It is designed to keep Ben at BT for a number of years.'

The changes to Verwaayen's pay follow the departure of a number of senior executives over the past 12 months, including Pierre Danon, the controversial former head of BT Retail.

'In the increasingly competitive markets for communications...in which BT operates, the present long-term incentive arrangements have not been acting as a sufficiently effective retention tool,' said the group.