BG scraps new boss Helge Lund controversial remuneration package amid investor fury

‘The rebellion was huge. We were getting emails on the subject of a scale that we’ve rarely seen’

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The Independent Online

Energy giant BG Group has bowed to shareholder pressure and slashed a controversial “golden hello” planned for incoming boss Helge Lund.

The FTSE 100 company, which was spun out of British Gas, avoided an embarrassing investor revolt by cutting the share award from £10m to £4.7m, which means it no longer needs to hold a binding vote on the payment.

One City fund manager told The Independent that it was UK investors in the company who led the fight against the £10m windfall. It caused such a furore because of its size and the fact that it breached a pay policy that BG had introduced only six months ago. It is believed that some institutions based in the US agreed with BG that Mr Lund’s package was in line with those handed to his peers across the world.

The Institute of Directors and major institutional investors including Legal & General were among those to speak out about Mr Lund’s pay. Last week, the Business Secretary, Vince Cable, described it as “excessive” and urged fund managers to reject it at an extraordinary meeting scheduled for 15 December.

Mr Lund, who will join BG in March, previously worked at Norway’s Statoil, where he is credited with turning around its fortunes. He could still pick up about £16m in annual pay and bonuses at BG, although the company expects it will be closer to £8m, with about 75 per cent performance-related and paid in shares.

“A significant number of shareholders questioned the structure of the package, in particular whether it was appropriate to go outside the remuneration policy approved by shareholders earlier this year,” BG said. “The board believes Mr Lund is an exceptional candidate and it is clear from the extensive consultation with shareholders over the past few weeks that this view is widely shared.”

 

The revised package was thrashed out by the board and Mr Lund over the weekend and agreed with the company’s major investors.

Martin Gilbert, the chief executive of Aberdeen Asset Management, which owns 2.4 per cent of BG, described Mr Lund’s original award as “vast” and said his company had seen unprecedented protests from its clients. 

He added: “The rebellion was huge. We were getting inbound emails on the subject of a scale that we’ve rarely seen in our business.

“There was clearly quite a campaign going on. We fully understand the board’s position of having to find a good CEO and we were very supportive of them going out to find the best CEO they could find. But in their desire to sign Mr Lund up I really think they lost sight of the vote they just got through and how much emotion this particular remuneration package would generate.”

Sacha Sadan, corporate governance director at Legal & General Investment Management, said: “We are encouraged to see BG responding positively to shareholders’ concerns. We look forward to the new CEO joining and creating shareholder value for all.”

Premier Asset Management welcomed the move to back down on an issue that had represented a “red flag for investors” and “take the sting out of this issue”. 

BG shares ended up 4.4p  at 904.6p.

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