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Executive pay: IoD attacks 'excessive' BG deal | |
(about 9 hours later) | |
A proposed £25m pay package for the new head of oil and gas giant BG Group has been branded "excessive" and "inflammatory" by the Institute of Directors (IoD). | |
Simon Walker, director general of the IoD, said Helge Lund's deal would damage the reputation of UK business. | |
The IoD acknowledged its criticism was strong, coming from a body whose job is to promote the interests of UK firms. | The IoD acknowledged its criticism was strong, coming from a body whose job is to promote the interests of UK firms. |
BG said Mr Lund was being paid a "competitive market package". | BG said Mr Lund was being paid a "competitive market package". |
'Red rag' | |
Mr Walker said the proposed pay package was " excessive, inflammatory and contrary to the principles of good corporate governance". | |
Speaking to the BBC, he said: "We think in any terms this £25m pay settlement is grossly excessive, it will inflame public sentiment , it will be a red rag to the critics of capitalism." | |
Mr Walker added said that the timing of the deal, so close to a general election, could put executive pay on the political agenda. | |
"It damages the reputation of British business as a whole to behave in this cavalier fashion, that has no regard for strongly held public sentiment... this is six months before a general election, in which you have an opposition that is already campaigning vigorously against big business." | |
Mr Walker said he was "very keen that shareholders deal with the situation". | |
Mr Lund's pay will be put to shareholders at a meeting next month. Mr Lund will join BG as its new chief executive in March, having been recruited from Statoil with the award of shares worth £12m and the chance of up to another £13.5m in pay, pension and other benefits if performance targets are hit. | |
He established his reputation after transforming Norway's Statoil from a national operator into a global company. | He established his reputation after transforming Norway's Statoil from a national operator into a global company. |
But some BG shareholders have voiced concern about the size of the annual pay package being offered by the FTSE 100 company. | But some BG shareholders have voiced concern about the size of the annual pay package being offered by the FTSE 100 company. |
The Investment Management Association, a body representing shareholders, issued a "red top" alert - a warning about potential corporate governance breaches. | The Investment Management Association, a body representing shareholders, issued a "red top" alert - a warning about potential corporate governance breaches. |
'Competitive' package | |
Mr Walker said the £25m sum was especially excessive given BG's size. Chief executives at the much-larger Royal Dutch Shell and BP have smaller pay packages. | |
The IoD has raised eyebrows before with criticism of pay and bonus issues at Barclays and Sports Direct. But a spokesman accepted that this BG criticism was its strongest yet of a major company. | The IoD has raised eyebrows before with criticism of pay and bonus issues at Barclays and Sports Direct. But a spokesman accepted that this BG criticism was its strongest yet of a major company. |
BG declined to comment specifically on the IoD's comments. But a spokesman 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. | BG declined to comment specifically on the IoD's comments. But a spokesman 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. |
"The shareholder vote on Helge Lund's pay is in line with the letter and spirit of corporate governance legislation." | "The shareholder vote on Helge Lund's pay is in line with the letter and spirit of corporate governance legislation." |