BG deal sparks fury over pay
BG GROUP is facing a fresh investor backlash over executive pay in the wake of oil giant Royal Dutch Shell’s £47bn takeover offer.
The potential £32m rewards package for BG chief Helge Lund was slammed as ‘completely over the top’ by one senior shareholder.
A chorus of senior investors in Shell and BG have revealed their dissatisfaction over bumper payouts at the oil firms.
Lund joined BG in February, just weeks before Shell made its approach. The deal for Shell to buy BG is likely to complete at the beginning of next year which means Lund will have been in the hotseat for only a year.
Lund is in line for pay and perks package – including lucrative share awards – that could reach £32m.
One fund manager described BG boss Lund and Shell chief executive Ben van Beurden as ‘competing fat cats on a podium’ and said shareholders will be expressing their views at AGMs next month.
Another shareholder described Lund’s pay as ‘completely over the top for not even starting the job’.
The comments place further pressure on Sir John Hood, who not only chairs BG’s pay committee but also presides over executive pay at WPP, the advertising giant that regularly faces investor revolts over rewards for its chief executive Sir Martin Sorrell.
Last year, 27pc of shareholders refused to back a pay policy that would hand Sorrell a £30m package. The advertising tycoon is this year in line for a £36m package.
Hood was criticised only months ago when BG was forced to scale back a welcome bonus for Lund in the face of investor outrage.
The Norwegian’s ‘golden hello’ of £12m was called excessive and inflammatory and eventually trimmed to £10.8m in December.
Sir John defended Lund’s pay in BG’s annual report earlier this month and said it is ‘competitive in the international market for oil and gas executives’. But shareholders have not been convinced.
One senior City shareholder said the fact that Lund will receive a large payout even though the company is being sold just as he joined will ‘certainly stick in the throat’.
He added: ‘We were quite resistant to the original package. Of course there should be some compensation for loss of future earnings but this is extreme.’
Another fund manager said BG mishandled its corporate governance and the mismanagement and investor dissatisfaction helped Shell to take over the firm.
Investors will make their feelings known at BG’s AGM ‘with one last kick at the board’, promised one aggrieved shareholder.
A Pensions & Investment Research Consultants ( PIRC) spokesman said: ‘Shareholders would be right to ask where the long-term value has been created in just over a year’s work that will deliver such a large payment.
‘Executive remuneration, particularly golden hellos and goodbyes, still needs reform in the UK.’
Deborah Hargreaves, who is the director of the High Pay Centre, said: ‘I am sure there will be protests at BG’s AGM. He is getting a lot more than he got in Norway and is working at a smaller company. It is hard to understand how they can justify this.’
Shell’s chief executive Van Beurden will get a package worth £17.2m for 2014, including a pension contribution of £7.6m. One investor said Shell had ‘suspended common sense when it comes to pay’.
Bob Dudley, boss of oil company BP, also faces a backlash over his pay, with advisers Glass Lewis and PIRC both telling shareholders to vote against his £8.6m pay package at its annual meeting next week.