Gas pay rebels face lukewarm reaction

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The Independent Online
Standard Life will not support a rebel shareholder's resolution at British Gas's annual meeting next week demanding the company goes back on its pounds 1m-plus pay package for chief executive Cedric Brown.

The shareholder, PIRC, a corporate governance consultancy, is proposing a resolution demanding British Gas reconsiders the 75 per cent increase taking Mr Brown's basic pay to pounds 475,000. Under the company's long-term incentive scheme, Mr Brown also gets a bonus paid in shares, worth up to 125 per cent of basic pay.

Dick Barfield, chief investment manager at Standard Life, said: "We have had a long conversation with the company and support the broad thrust of what they are doing on executive compensation. If we didn't support the company on this, we would vote against the re-election of the directors, not for PIRC's resolution."

However, Mr Barfield added: "We have reservations about the performancing of the long-term incentive scheme."

He said he wants to see bonuses related to the company's profit performance rather than movements in share price.

The row over British Gas pay will come to a head at the company's AGM at London Arena next week. The number of shareholders saying they will attend was 6,800 last night. The postal voting deadline is effectively tomorrow.

A British Gas spokesman said voting so far shows "considerable support for the company", but said some shareholders had voted for PIRC.

PIRC claims it has seven household-name institutions agreeing to support them, with five others abstaining, but refuses to name them.

Anne Simpson, PIRC's joint managing director co-ordinating the campaign, said: "Management must lead by example on pay. British Gas, at a time of redundancies and pay cuts, has upset staff, which must concern shareholders."

Whether the campaign can achieve a rethink on board pay, PIRC claims it will have been worthwhile. "The commotion on Cedric Brown's pay has made fund managers and pension fund trustees sit in their own boardrooms and take voting issues seriously for the first time."