British Gas still losing customers but bosses have money to burn

Despite a share price that looks like a downhill ski slope, the company’s top four bosses were paid £5.6m last year

British Gas owner Centrica has its AGM today (Reuters)

“Satisfying the changing needs of our customers” is how British Gas owner Centrica entitled its annual report, which is frankly hilarious given the degree of dissatisfaction they’ve shown.

Ahead of the AGM called to discuss that report, the company revealed that it had lost another 110,000 of them in the first four months of the year.

In the bizarro world of the City that was actually seen as a good thing, because the rate has slowed a bit compared to last year such that Centrica was able to say that it’s on track to hit its modest targets.

With a five year share price that looks like something Ski Sunday’s presenters will be talking about this winter, the market has taken the trading update as a straw to be clutched at.

Let’s look at the Centrica investment story: over those five years shareholders have lost more than 50 per cent of their money. Over the last year they have lost around 25 per cent. So many bad headlines has the company, the biggest and most high profile member of Britain’s big six energy firms, generated that if it were able to use them as a source of fuel it’d be able to power the entire country for the next decade. The most recent was for a price rise described by MPs as “a slap in the face for customers”.

In a sensible world the people who’d presided over such corporate ineptitude would be drawing their pensions and lamenting their luck.

But this is corporate Britain where, if you get a seat on the executive committee of a public company, they give you a coin and tell you to throw it up in the air. When it lands you’ll see there are no heads or tails on it because both sides bear the legend Cha-ching!

Centrica’s big four bosses, led by chief executive Iain Conn, made a collective £5.6m for serving up a dog’s dinner last year. That’s less than the £9.4m they were paid in 2016. But it’s still £5.6m when in the world outside FTSE 100 ExCos you can get fired for producing a hell lot better than they have.

How have they been allowed to get away with it?

Here’s an excerpt from the pay setting remuneration committee’s statement: “The committee noted that most group objectives and milestones were achieved including completion of the material divestment programme, strengthening of the balance sheet through net debt reduction to £2.6bn, cost efficiency targets were exceeded and significant progress was made on safety issues.”

Yep, that’s right. Despite customers departing at the speed of Lewis Hamilton on a fresh set of slick tyres, and shareholders watching their money disappear like rivals in the Formula One champion’s rear view mirrors, that is what non-executive directors charged with looking after investors’ interests chose to say.

They did admit that “the committee has a duty to consider these achievements against shareholder experience” and “give due weight to all of the outcomes in 2017”. So no annual bonuses, and some tweaks to the share-based long-term incentive scheme that gives some recognition to the fact that it’s easier to get shares to rise when they’re skidding around in the bargain basement.

But that’s little more than a sop. The statement is about as tone deaf as it gets.

It just isn’t at all unusual. Other companies’ RemCos have said very similar things when they’ve found themselves in the same position.

Because Centrica was born from privatisation, it has a decent number of small “retail” shareholders who sometimes turn up to AGMs to add a little heat to the proceedings by calling companies to task for this sort of behaviour.

But the power brokers in the City are a different matter entirely and Centrica’s directors know that, so its bosses can look forward to another lucrative year regardless of how it ends for their shareholders.