Helge Lund, the incoming chief executive of BG Group, won’t be getting as shiny a golden hello as he had been hoping for. After extensive pressure from shareholders and commentators the FTSE 100-listed oil and gas company has cut the share element of his proposed pay package from £10m to £4.7m.
Lund will join BG in March after 10 years as the boss of Statoil, Norway’s state-owned oil and gas group. His pay package, previously estimated at around £25m, was panned by shareholder groups and the Institute of Directors, which labelled it ‘excessive, inflammatory and contrary to the principles of good corporate governance.’
‘A significant number of shareholders questioned the structure of the package, in particular whether it was appropriate to go outside the remuneration policy approved by shareholders earlier this year,’ the company said in a statement.
‘Both the board and Mr Lund recognise and wish to respond to shareholder concerns. The board welcomes the active and constructive role played by Mr Lund in revising the remuneration package so that all elements fall entirely within the company’s current policy.’
The revised package will not need to be put to a shareholder vote as it complies with the company’s preapproved remuneration policies, saving Lund from a nail-biting wait to discover his fate. He will still receive a package worth as much as £18m depending on performance - not exactly small change.
This includes £1.5m basic pay, a 30%-of-salary payment in lieu of a pension and a bonus of up to twice his salary. The initial share grant of £4.7m and an annual share grant of up to six times his salary will both be linked to performance and he will also receive a £480,000 relocation allowance and a £1m buyout of forfeited Statoil pay.
IoD boss Simon Walker welcomed the decision, saying the group applauded BG’s changes. 'While substantial, the total remuneration is reduced and now falls within proper limits for a company of BG’s size and international importance,' he said. Time will tell if shareholders feel the same.