and PETER RODGERS
The continuing controversy over the earnings of Cedric Brown, chief executive of British Gas, was fuelled yesterday following publication of the company's annual report.
Figures in the report show that total pay and benefits for the chief executive rose by 71.2 per cent to £492,602, with pension contributions taking Mr Brown's total remuneration package to £511,602.
This contrasts with statements by British Gas, in its evidence to the Commons employment select committee, that Mr Brown's £500,000 pay package last year was a real increase of only 28 per cent.
The gas company disclosed last year that Mr Brown's basic pay rose by 75 per cent. But in evidence to the committee of MPs, it argued that changes in executive terms and conditions meant that his total remuneration had increased by 28 per cent not 75 per cent.
Greville Janner MP, chairman of the comittee, said:"I am sure the committee will want to look at these figures and consider their implication."
A spokesman for British Gas denied any attempt to mislead the committee. "You have to look at the actual words to the select committee. I do not think it is misleading, I think it is just complicated."
The report also shows that the cost to the British Gas pension fund of Mr Brown's new level of pay is £555,000. His own contributions to the fund will rise by only £8,200 a year to secure additional pension.
The report also reveals that Mr Brown has unused share options which can be exercised by next month that would net him an immediate profit of £200,000 at yesterday's price. He has a further 361,000 options that are exerciseable from October 1995 to November 1997. And a long-term incentive scheme could eventually pay him up to a further £593,000.
Richard Giordano, the chairman, admits in the report that the furore over pay marred the last few months of the year and that the way the increases emerged created created confusion. "For this we can only blame ourselves," he says.
Mr Giordano adds, however: "Although we wish that we had handled the disclosure of these pay changes more adroitly, the board is robust in its belief that we have taken the right decisions."
He has argued that Mr Brown's cash compensation is below that of at least 80 other plcs, saying: "Given the size, complexity and challenge of his job at British Gas, he is hardly paid over the odds."
The company now faces a barrage of criticism at its annual meeting next month, when directors, including Mr Brown, come up for re-election. Among angry shareholders are an order of nuns, the Daughters of Jesus, who are considering attending the meeting to complain about the "injustice" of Mr Brown's pay increase.
Special resolutions for the meeting include a call by Pensions and Investment Research Consultants for the company's executive remuneration policy to be revised "in line with the standards of best practice".
Anne Simpson, managing director of PIRC, said last night: "The whole way they have played this is so misleading and disingenuous, right across the board."
British Gas should be sensitive to the views of its 18 million domestic customers, PIRC says. Its resolution also suggests that Mr Giordano should no longer be on the remuneration committee as, although non-executive, he is required to give 75 per cent of his time to British Gas.
A group of shareholders also proposes a special advisory group with the ability to interview the chairman and chief executive three times year and report to the annual meeting. They argue that British Gas directors are distanced from their consumers, workers and private shareholders.
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