Gas chief denies he hid shares perk

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Indy Politics
Cedric Brown, the chief executive of British Gas, last night denied Labour allegations of concealing from MPs share options worth up to £240,000 on top of his remuneration package of more than £1m.

British Gas issued a statement dismissing the claims as "nonsense". However, the statement confirmed that he had been allocated the additional 268,211 share options in October.

Despite denying the allegations by Gordon Brown, Labour's shadow Chancellor, that British Gas board members have "not told the truth", Cedric Brown is likely to face tough questioning by the Commons Employment Select Committee today over his remuneration.

The British Gas statement said: "Cedric Brown's written submission to the committee made quite clear that the executive share option scheme was being terminated at the end of 1994. It also made clear that a new long-term share-based scheme was being designed to replace the executive share option scheme. Details have yet to be determined by the remuneration committee."

But Labour claimed that before the scheme came to an end, British Gas increased Mr Brown's share option allocation from 23,000 shares in 1993 to 268,000 shares in October 1994. Cedric Brown and Richard Giordano, chairman of British Gas, were recalled to face questions by the committee after it was disclosed that Mr Brown would have £593,000 in share bonuses in addition to his £475,000 salary.

Today's hearing is expected to intensify the pressure on John Major for action to curb excessive pay bonuses for the chiefs of the privatised utilities.

Labour leaders challenged the Prime Minister to complete his U-turn over "distasteful" excesses last week by supporting Labour amendments to the Gas Bill, due for a Commons second reading on 13 March, to stop "boardroom greed".

Gordon Brown said Labour welcomed the move by British Gas shareholders who planned to use the annual general meeting in May to stop pay abuses in the company.

Labour is proposing to tax executive share options as income, giving the regulator power to cut prices, and placing an obligation on boards to get prior approval from shareholders for pay increases.

The furore over share options has forced the Government to back down over a clause in the Finance Bill, to extend Inland Revenue-approved share option schemes to part-time employees and part-time directors - its first step against executive pay.