Bonus will make British Gas chief's pay top pounds 1m

Cedric Brown, chief executive of British Gas, faces thousands of shareholders at the company's annual meeting this morning, knowing that, short of a disaster, he will pick up a pounds 440,000 bonus this year to take his pay package to more than pounds 1m.

The outrage provoked by Mr Brown's salary rise of 75 per cent last year will be fuelled today by an independent study which confirms his pounds 1m-a- year status. But shareholders are unlikely to be pacified by the mountains of tuna, ham and egg mayonnaise sandwiches which British Gas said last night it was planning to feed more than 7,000 who have indicated they will attend.

Expected among the audience at London's Docklands Arena are representatives of the holy order, The Daughters of Jesus, whose investments include Gas shares.

But the chief protagonist is Pension Investment Research Consultants (PIRC), which wants Mr Brown's pay package revised, a move unanimously opposed by the board. It is PIRC's claim that the performance of British Gas can remain static, or profits even fall, and Mr Brown will still collect his bonus.

Under a new bonus scheme announced in November, Mr Brown gets a bonus worth up to 125 per cent of his basic pay. The actual percentage awarded depends on the company's performance relative to that of all other FT- SE "league table" of 100 companies.

If the company comes in below the top 60, Mr Brown gets no bonus.

At 60th position Mr Brown gets 30 per cent of the shares he can be entitled to. At 50th place, 75 per cent of the shares are awarded.

However, an analysis for PIRC by the independent financial consultants, Datastream, shows that British Gas is already in 46th position. At this level Mr Brown is entitled to 75 per cent of the shares awarded under the scheme - which would be worth 93 per cent of his pounds 475,000 basic salary.

British Gas disputes the Datastream analysis, claiming the company is currently in 75th position in the table. These were the figures the company gave the House of Commons Employment Select Committee in March as part of its inquiry into boardroom pay.

Last night, a spokesman said the scheme was one used by other FT- SE 100 companies.

The chief's pay packet

1994 Basic pay pounds 475,000

Benefits in kind pounds 17,602

Total pounds 492,602

1995 Basic pay pounds 475,000*

Max. bonus pounds 593,000

Benefits pounds 17,600*

Total pounds 1,085,600

How the bonus is calculated

The basic pay is set by the board each summer. The bonus, paid in shares, is worth up to 125 per cent of basic pay. The amount awarded depends on the company's position in a league table of FT-SE 100 companies.

*Estimate based on 1994. Benefits include chauffeur-

driven car and life and medical insurance.