Giordano leaving BG with £500,000 pay-off

Sir Richard Giordano is to retire as chairman of BG, the oil and gas exploration group, at the end of this year with a pay-off estimated to be in the region of £500,000.

His successor, Sir Robert Wilson of the mining giant Rio Tinto, will take over as part-time non-executive executive chairman of BG on a salary of £500,000 plus benefits.

Sir Richard became chairman of British Gas in 1994 and oversaw the demerger of first Centrica and then the gas pipeline network Lattice. But he also presided over the first great "fat cat" row to hit Britain's boardrooms when the company's chief executive, Cedric Brown, was forced to quit after a huge controversy over an 87 per cent pay rise.

At one point, Mr Brown had a pig named after him.

Sir Richard will receive £250,000 or six months pay in lieu of notice when he leaves in December. He will get a further lump sum to buy out his entitlement to an office, a car and a chauffeur for a period of five years after leaving BG. In addition, BG is liable to pay the bills of Sir Richard's tax advisers for two years following his retirement.

A spokesman said the amount to be paid as a lump sum had not yet been worked out. But remuneration consultants said it was likely to be at least another £250,000.

Sir Richard's pay and perks deal at BG provoked a protest at this year's annual meeting, when a fifth of shareholders refused to back his re-appointment as a director and 26 per cent voted against or abstained on the company's remuneration report.

Speaking about his decision to leave the group, Sir Richard said: "At the end of December I will have served British Gas and successor companies for ten years and, as I will be 70 at my next birthday, I believe it is time to retire from BG Group."

His successor, Sir Robert, retires as executive chairman of Rio Tinto in October with one of the biggest pension pots ever seen in British industry. His £14.6m fund will pay him an income of £656,000 a year.

The BG spokesman defended Sir Robert's £500,000-a-year salary even though his will be a non-executive, part-time role with no contractual requirement to work a minimum number of days for the company. "It is a lot of money but as far as we are concerned it enables us to secure someone of an incredibly high calibre. It is Sir Robert's international experience which is of particular value to BG. He will clearly be very much involved and we would expect him to travel on the company's behalf."

Sir Robert is also chairman of the Economist magazine, a non-executive director of the food and drinks group Diageo and will join the board of GlaxoSmithKline in November .