LETTER:Calculating the rate for the job at British Gas

From Mr Peter Sanguinetti

Sir: May I correct some information in your article "Gas chief's pay comparison challenged" (5 June)? The data Cedric Brown quoted in his television interview, screened after our AGM, was from an independent organisation called Monks Partnership. It is surely better to use independent research than that of Pension Investment Research Consultants (PIRC) or our own.

Furthermore, Anne Simpson of PIRC is presenting a confused picture of our pay package. We have abandoned annual cash bonuses so there will be no bonus for Cedric Brown this year. We have also abandoned the automatic allocation of share options.

In their place, is a long-term, share-based incentive scheme that will reward on performance over three years, compared to the rest of the FT- SE 100 companies, and no payment will be made for five years. In other words, for the avoidance of doubt, Cedric Brown will not receive an annual bonus and will not earn any more money until the end of the century, and then only if British Gas beats the performance of other companies in the FT-SE 100 index - a tough target in view of continuing price regulation and the introduction of competition into the domestic market through the Gas Bill, which is currently going through Parliament.

Half the gas market has already been opened up to competition (users of over 2,500 therms per annum) and competitors have 65 per cent of this market as a result of regulatory controls. The balance, namely the domestic market, will be opened up for competition commencing in the South West next year, with full competition in 1998.

British Gas was fully transparent in all Executive remuneration in this year's Annual Report, which is very much at the leading edge of full disclosure. May I also point out that Cedric Brown was given an overwhelming vote of 97.6 per cent of all shareholders in favour of being re-elected.

Yours sincerely,

PETER SANGUINETTI

Director of Corporate Affairs

British Gas

London, SW1

2 June