Energy giant BG Group forced into climb down on controversial £25m pay deal for incoming chief executive
The company had planned to pay incoming chief executive Helge Lund a share windfall of £12million, on top of his regular £13million annual package
Oil giant BG Group has been forced to back down over a controversial £25million pay deal for its new boss.
The company had planned to pay incoming chief executive Helge Lund a share windfall of £12million when he arrived, on top of his regular £13million annual package.
But after faced with mounting cricitism and the prospect of a humiliating shareholder revolt over the measure, the company this morning slashed the amount Lund can receive.
Instead of £12million in shares he will receive £10.7million - but the company said it has also tightened the conditions he has to meet to receive them.
Previously it was up to the pay committee to assess whether he showed sufficient 'leadership' and 'strategy'.
But now his rewards will be tried to the firm's financial performance.
It is likely he will only actually collect £4.7million of stock, the group this morning announced.
In addition, he is only expected to get £4million of an annual share bonus that could be worth £9million, the group said.
BG said it made the changes because 'a significant number of shareholders questioned the structure of the package, in particular whether it was appropriate to go outside the remuneration policy approved by shareholders earlier this year'.
Both the board and Mr Lund 'recognise and wish to respond to shareholder concerns', it said in a statement.
It had been due to hold a vote on December 15 for shareholders to pass the additional welcome package for Lund.
But because of the changed terms, the group has cancelled this ballot because it says the award is now in line with the group's pay policies as voted for at the annual meeting.
If the deal had remained unchanged it is likely the measure would have been voted down.
Four of the top 15 shareholders had publicly criticised the award, while others were privately unhappy.
Small shareholders and business groups had also lambasted the deal.
A significant numbet of large corporate governance advisory firms had also come out against it.
ISS, Glass Lewis and Pirc had all advised clients not to back the £12million share package.
The Institute of Directors 'applauded' the climbdown after describing the initial package as 'excessive, inflammatory and contrary to the principles of good corporate governance'.
Simon Walker, the IoD’s director-general, said: 'While substantial, the total remuneration is reduced and now falls within proper limits for a company of BG’s size and international importance. We continue to welcome Helge Lund’s appointment and wish him and BG well in the challenges they face.'
BG's shares stayed under pressure, however, off another 3 per cent or 27p to 873.2p as energy stocks took another tumble after crude prices slid to five year lows today, extending last week's sharp decline following industry cartel Opec's inaction on production cuts.
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