Credit: BG

BG slammed for new CEO's 'inflammatory' £25m pay deal

The IoD's Simon Walker said the news was a 'red rag' to anti-capitalists ahead of the general election.

by Jack Torrance
Last Updated: 01 Dec 2014

Unlike a lot of business groups, the Institute of Directors isn't afraid to get down and dirty with the big stories of the day. This year it's released statements blasting the governance of China's ecommerce giant Alibaba and Mike Ashley's Sports Direct, questioning the appointment of Experian's chairman and even calling for Fifa's president Sepp Blatter to step down (good luck with that).

Today its director-general waded into the debate over incoming BG chief exec Helge Lund's massive £25m pay deal. The oil & gas firm's board plans to pay Lund a £1.5m salary, a bonus worth up to twice that, £12m in shares and other benefits dependent on performance.

Walker told the BBC the deal was 'excessive, inflammatory and contrary to the principles of good corporate governance,' adding that it was especially large given the size of BG compared to others in its industry. The heads of Shell and BP don't even get that much.

'We think in any terms this £25m pay settlement is grossly excessive, it will inflame public sentiment , it will be a red rag to the critics of capitalism,' he said. 'It damages the reputation of British business as a whole to behave in this cavalier fashion, that has no regard for strongly held public sentiment... this is six months before a general election, in which you have an opposition that is already campaigning vigorously against big business.'

Yesterday it was reported the Investment Management Association, whose members oversee £5 trillion of assets, had issued a 'red top' warning against the plans. The ISS, advisers whose clients own around 20% of the FTSE 100, have also reportedly advised investors to reject them. Shareholders will vote on the plans at an extraordinary general meeting (EGM) on December 15th.

BG hasn't responded directly to the IoD, but a spokesperson said, '[Lund's] proposed remuneration is competitive in the international oil and gas industry. The shareholder vote on Helge Lund's pay is in line with the letter and spirit of corporate governance legislation.'

That's debatable, but it certainly won't go down well with the public.

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