Oil explorer BG Group has trigged blazing row over executive pay after it offered a potential £29 million package to a new chief executive to revive the company’s fortunes.
The staggering deal for Helge Lund, the boss of Norwegian oil and gas company Statoil, is so big that it exceeds BG’s previous remuneration policy and will have to be approved at a special meeting under new corporate rules.
Lund will gain a £1.5 million basic salary and £450,000 payment in lieu of pension — and even a £480,000 relocation allowance.
It also includes an annual bonus of up to £3 million, long-term share incentives of up to £9 million and a buyout of Statoil share options which could net him up to £3 million.
A special share award worth a potential £12 million over five years is the largest part of the package and must be approved at the meeting.
Lund, is also effectively holding a gun to the head of BG’s shareholders to approval the lucrative deal as BG said the Norwegian was “not obliged to join if the share award is not approved”.
Luke Hildyard, deputy director of the High Pay Centre, described the pay deal as “ridiculous and unnecessary”.
He said: “BG have bought into the ‘cult of the CEO’ — the idea that lone individuals can shape the fortunes of massive organisations single-handedly. But it is very often the case that executives who are successful with one company struggle in different conditions at a different organisation.
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“BG ought to be training and developing potential leaders of their own, rather than hiring from rivals at a totally extortionate cost.” A source at one pension advisor refused to comment publicly until it had advised its clients, but said that Lund’s pay looked “excessive”.
BG has been scrambling to find a new leader since ousting Chris Finlayson in April. Finlayson took over from long-serving Sir Frank Chapman at the beginning of 2013 but oversaw a succession of profit warnings and problems.
Sources said BG held early conversations with shareholders over the package, “which have been constructive”.
Insiders say the company is competing in an international market for top talent where bosses can earn around £9 million a year on average and Lund’s pay is likely to be on a par with that.