Giordano's office deal provokes ire at BG

Shareholders in BG Group are being advised to snub Sir Richard Giordano, the chairman, over an unusual agreement to pay for his office requirements if he leaves the company.

The National Association of Pension Funds (NAPF), whose members run £700bn worth of investments, recommends that investors abstain on Sir Richard's re-election at the annual general meeting on Tuesday.

He is a part-time chairman of the company, formerly known as British Gas. However, he sits on the remuneration committee, which decides the size of directors' pay packages – a job considered by the NAPF to require an independent director.

Mr Giordano is not considered independent because he holds a service contract, which includes payment for an office in a location of his choice, plus a secretary, and the use of a car and driver for five years after he leaves. He will get a year's salary if he goes or a year's notice – a deal not available to other directors.

Last year Sir Richard received a pay package of £490,373, which is increased every year in line with inflation. He is allowed a car and driver, and BG pays fees incurred by his tax advisers. The tax advice will also be continued for two years after he leaves.

Sir Richard is also deputy chairman of mining firm Rio Tinto, and a trustee of the Carnegie Endowment for International Peace, a not-for-profit organisation that aims to advance co-operation among nations. "We value his contribution to the company very highly," said a spokesperson for BG. "He spends 75 per cent of his time with BG, and continues to make a major contribution." Sir Richard was hired from the US in 1985 to run industrial gases group BOC, and his remuneration package made him one of the highest-paid directors in the UK at the time.

The NAPF has also recommended abstention on the re-election of investment banker David Benson, because he sits on BG's remuneration committee but is not considered an independent director.

Separately, at pharmaceuticals firm AstraZeneca, the re-election of non-executive director Erna Möller, is also not supported, for the same reason. She is not considered independent because she has links with a major shareholder.

The NAPF has increasingly spoken out against excessive pay packages and poor corporate governance. It is currently opposed to pay packages at other FTSE 100 companies, Reuters, Schroders, Shell Transport & Trading and Barclays.