BG braced for stormy meeting as pay moves centre stage at AGMs

BG Group, the oil and gas exploration group, will tomorrow set the tone for an acrimonious week of clashes between companies and the corporate governance lobby when shareholder bodies attempt to block the re-election of its chairman, Sir Richard Giordano.

The National Association of Pension Funds is urging members to abstain at BG's annual general meeting vote on the re-election of two directors – its chairman and David Benson, a non-executive who has been on the board for 10 years.

The NAPF objects to the way Sir Richard, who has been chairman since 1994, is paid. Unlike most non-executive chairmen, who receive a fee, Sir Richard has an annual contract with the company worth £440,000. The package includes a one-year notice period.

The influential shareholder body also has a problem with the fact that Sir Richard is entitled upon leaving BG to a payment to cover the cost of running an office, with a full-time secretary and chauffeur-driven car for five years.

A spokesperson for BG said: "If you compare [Sir Richard's] contract to other non-executive directors it does look like more than others. But he spends 75 per cent of his time on BG and the board believes he is remunerated appropriately for the job he does."

The explanation is set to be the first in a long line of attempts by companies to justify generous pay packages for their top executives in the face of criticism from the NAPF and other bodies.

Schroders on Wednesday, Barclays on Thursday and Wembley and Anglo-American on Friday are also heading for showdowns at their AGMs.

The Association of British Insurers this weekend highlighted its concerns with Anglo's share options scheme, which gives directors rolling targets. This allows them longer to achieve their goals than many schemes, under which management have to deliver on promises within a fixed period, typically of three years.

The shareholder bodies have been particularly outspoken about what they have called "reward for failure" pay-outs to senior executives who are fired. These are guarantees of two years of pay, and often bonuses, to top management in the event that they are forced out of the company.

Barclays is in hot water for the £4m severance package Matt Barrett, its chief executive, would receive it the bank were taken over and he were forced out.

Wembley will face similar opposition at its AGM and Abbey National is also likely to attract criticism, as its chief executive, Luqman Arnold, is also on a two-year deal.

Schroders has fallen foul of shareholder groups over the guaranteed £1.8m annual bonuses its chief executive, Michael Dobson, is entitled to.

Shell falls into the category of reprobate companies over its pay packages for directors and is also heading for a dispute over its environmental record at its annual shareholder meeting on Wednesday.

Friends of the Earth said people whose communities are near the giant oil producer would hold an alternative meeting on the day to highlight the damage it has done to their environments. The charity said: "Shells neighbour's want to expose Shell's impact on their environment and their health."

Separately, GlaxoSmithKline signalled that it was preparing to rewrite its directors' pay contracts to better reflect the grim condition of the global economy. The pharmaceuticals giant has appointed Deloitte & Touche to review its remuneration policy. The company may use its AGM on 19 May to make it clear that the criteria for remunerating its top executives will be made more stringent for the current year.

The company is nonetheless prepared for a clash with shareholders, as its chief executive, Jean-Pierre Garnier, is currently on a two-year rolling contract which entitles him to a golden goodbye of about £5m.