SIR Peter Bonfield earns a basic salary of £820,000 a year. In the past five years he has earned in a year what many people cannot dream of earning in an entire working lifetime.

Now, at 57, he can look forward to a very happy retirement, thanks also to a £1.5m pay-off from his employer, plus the prospect of that figure being almost matched by share options over the next three years.

No one should begrudge senior directors handsome salaries and even more handsome retirement gifts - if they earn it.

An individual in an exceptional position, heading an international business, employing tens of thousands of people, and earning thousands of pounds for shareholders and pension funds, is entitled to exceptional rewards.

Particularly in the hugely competitive telecommunications market in which BT operates.

Regrettably, salaries are determined arbitrarily, usually by fellow directors. They do not necessarily reflect true worth and performance.

Such self-regulation is bound to attract suspicion.

In any company listed on the stock market, there exist two measures of performance - pre-tax profits and share price.

Under Sir Peter's stewardship, over the past year BT's share price has nosedived from a peak of nearly £13 to last night's closing price of £3.48. Ironically, it rose three per cent yesterday following confirmation of Sir Peter's imminent departure.

At the same time, profits have been held back by BT's £30bn debts and its apparent failure to keep pace with its competitors.

Against such a background it is difficult to disagree with the description of Sir Peter's package by one shareholder as 'obscene'.

It will be impractical and improper for the Government to intervene in the process of private sector pay.

Equally, the notion of letting shareholders vote on the salaries and bonuses of directors is too far-fetched to contemplate. Nevertheless, there is some merit in revising the present process.

But ultimately, only shareholders can wield the power and apply the pressure to persuade companies to devise more transparent and accountable salary structures which reflect individual performance and wealth creation.