BG pay deal criticised
The Institute of Directors (IoD) has criticised the recent pay deal agreed for the new executive of the oil and gas group BG.
Helge Lund will be given £25 million for his appointment at the leading energy firm, but Simon Walker, head of the IoD, believes the move sends the wrong message ahead of next year’s general election.
He has raised concerns it could undermine attempts made by the business community to gain the trust of the public and could put executive pay back on the political agenda.
“It is excessive, inflammatory and contrary to the principles of good corporate governance,” said Mr Walker.
He added: “The Institute of Directors is always reluctant to criticise an individual company. However we do have a responsibility to criticise an action that brings the whole of British business into disrepute and threatens already fragile attitudes to corporate Britain.”
Mr Lund’s deal includes a £12 million ‘golden hello’, as well as annual earnings of around £13.5 million if he meets certain targets.
BG will put the new pay deal to its shareholders next month because it will require a change in the company’s current pay policies – something which the IoD has raised concerns about.
Mr Walker explained: “It will damage the legitimacy and integrity of corporate Britain as a whole by seeking to unpick binding votes cast by the owners of the company. It cannot be right to put fund managers in a position where, unless they approve excessive pay way beyond agreed policy, their shares will fall in value.”
He called on BG shareholders to consider the impact the pay deal could have on the whole business community and therefore, they should consider rejecting it.
A spokeswoman for BG said: “We believe Helge Lund is the right person to lead BG Group. His proposed remuneration is competitive in the international oil and gas industry. We are talking to our shareholders and will continue to do so until EGM on 15th December.”
Norwegian-born Mr Lund played a key role in the advancement of Statoil and its expansion into the lucrative markets in the Gulf of Mexico and Russian Arctic.