Ian Livingston is set for rewards of almost £7 million in his first year as chief executive of BT if he meets targets of a new incentive scheme.

The 43-year-old, who succeeds Ben Verwaayen as head of the telecoms group on July 1, could walk away with more than double what he earned last year, thanks to a newly structured pay package for top executives.

Mr Livingston will earn a basic salary of £850,000, up from the £614,000 he got as head of BT Retail.

On top of this he can expect to add £1.7 million in annual bonuses, £1.7 million as a deferred bonus in shares which vest after three years and £2.55 million in incentive shares if the group hits its top performance targets, taking the total £6.8 million.

In the last financial year Mr Livingston earned a total of £3.35 million, including deferred bonus, up from £3.23 million the year before.

A BT spokesman said: “We are always extremely happy to reward success. If the company hits extremely stretching targets and the executives earn the maximum amount the shareholders will be cheering from the rooftops.”

Mr Livingston's basic salary is £850,000 - £58,000 more than Mr Verwaayen's basic salary as BT boss last year.

Mr Verwaayen, will depart with around £5 million in pay and shares when he leaves the company at the end of next month.

Under his contract he was promised £700,000 on its termination and he is also eligible for a bonus for the period of April 1 to June 30, of around £300,000. He will also receive shares already earned as a deferred bonus during the past three financial years and worth about £4 million.

According to BT’s annual report, published yesterday, other benefits in the executive pay package include company car (plus fuel or a driver), personal telecommunications facilities, home security, medical and dental cover, special life cover and financial counselling.

BT said basic salaries had been increased to bring them within “an acceptable market range”.

Hanif Lalani, BT’s finance director, sees his basic salary increase to £585,000, while Francois Barrault, BT Global Services chief executive, will be paid Euro 850,000 (£654,000).

Mr Barrault, who took over from Andy Green who left at the end of last year to become the new head of IT services group, Logica, earned a total £1.58 million including £208,000 in benefits.

Andy Green, the new chief executive of Logica, earned £234,000 in bonuses for the months he worked during the year.

Sir Peter Bonfield, BT’s former chief executive, continued to receive a pension of £375,736 a year “under pre-existing arrangements”.

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