BG discovers the Goldilocks point for massive executive pay deals

Outlook: Now BG shares haven’t been this low since the depths of the financial crisis back in 2008

So now we know what it costs to buy off institutional investors: £5m. That’s the amount of money that has been “revised” out of incoming BT Group chief executive Helge Lund’s appalling “golden hello”. A payment that was in breach of a remuneration policy that was hardly ungenerous in the first place, and hence would have required a shareholder vote.

The “revision” – made after shareholders started kicking up a fuss – means the package now ticks the right boxes.

So on the face of it, this looks like a victory for those who claim that the system works. The shareholders spoke, the company listened, all those guidelines bearing the legend “comply or explain” operated effectively. Huzzah!

Here’s the problem. Mr Lund is apparently a talented executive, but he’s still being paid as if he’s the business equivalent of Lionel Messi. Even after the package’s revision, he’ll still get £4.7m up front, a £1.5m salary, a bonus, and a long-term incentive scheme worth up to six times his basic pay.

With 62 per cent of that package now, in theory, linked to performance, the package satisfies the company’s pay policy. So no vote, which neatly gets City institutions off the hook. Their apparent victory means the thornier problem of the performance link won’t be raised as an issue. And it’s there that things start to get sticky again.

“These conditions are expected to comprise a combination of relative total shareholder return, cash flow and capital efficiency measures,” the company says.

Now BG shares haven’t been this low since the depths of the financial crisis back in 2008. It’s true that the company has been struggling. But the biggest millstone around its neck is the oil price, currently trading at five-year lows.

Were prices to start rising again both the share price and BG’s cashflow would improve dramatically, even if Mr Lund were to spend his time with his feet up whistling along to A-Ha songs (a Norwegian One Direction active in the 80s, in case you were wondering).

It’s fun to start a job when the commodity on which your employer relies is at its nadir, because, to quote another 80s tune, the Only Way Is Up (Baby).

But you won’t hear institutional investors making more fuss. Rocking the boat again would be too much effort when they’ve bonuses of their own to worry about.