Golden hello lures oil man to British Gas

British Gas yesterday courted fresh controversy by bringing in a new chief executive to run its transportation arm, TransCo, with the lure of a pounds 100,000 "golden hello".

David Varney, a senior executive with the oil company Shell, will take up the post in June with a salary of pounds 385,000 in addition to his signing- on fee.

The appointment pushes Philip Rogerson, who had been widely tipped for the TransCo job, upstairs into the role of deputy chairman, amid increased speculation about his long-term future with British Gas.

British Gas also announced that Roy Gardner, brought in from GEC Marconi 18 months ago, will beome chief executive of British Gas Energy, its trading and supply arm, with immediate effect.

The appointments virtually complete the shake-up at the top of British Gas under chairman Richard Giordano in readiness for the planned demerger of TransCo and British Gas Energy in spring 1997.

A spokeswoman defended the signing-on fee for Mr Varney, saying it was compensation for reduced share options and pension entitlements as a result of leaving Shell.

His salary, she added, was the market rate required to attract a senior Shell executive. "There are plenty of chief executives of smaller companies with less demanding jobs who are paid more."

Mr Varney was previously director of Shell International Petroleum Company, responsible for managing its European downstream oil business. From 1991 to 1995 he was managing director of Shell UK's downstream oil business and during the mid 1980s ran a number of Shell operating companies in the Far East and Australasia.

His appointment to TransCo comes just three days before the gas industry regulator, Clare Spottiswoode, unveils tough new price controls on the business, expected to trim at least pounds 300m off British Gas's revenues and place further strain on its ability to maintain dividends.

Despite Mr Varney's appointment, Mr Rogerson will continue to lead TransCo's negotations with Ofgas over the new pricing formula. He will also be the board director responsible for carrying through the demerger project.

British Gas maintained that even after the demerger was complete he would have an important task to perform handling regulatory matters.

But industry observers questioned what long-term role Mr Rogerson could perform. "He hasn't got the job everyone expected him to get and although he may not be too distraught at that it is difficult to see what he does once demerger is complete," said one source.

Mr Gardner, who received a pounds 200,000 golden hello when he joined in November 1994, is on a salary of pounds 320,000 but has not received a pay rise for getting the chief executive's job at British Gas Energy.

His main task there will be to renegotiate the pounds 40bn take-or-pay contracts with North Sea oil companies.

Increased competition and falling prices have left British gas without customers for much of the gas, creating huge potential liabilities.

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