CENTRICA finally confirmed yesterday that it was in talks with BP’s Iain Conn over the possibility of him taking over the top role from Sam Laidlaw.
Oil major BP announced yesterday afternoon that Conn was stepping down by the end of the year after almost three decades at the company, prompting a statement from the energy company confirming the talks.
Laidlaw’s departure has been in the rumour mill for some time, but it is thought that Centrica has struggled to find someone willing to take on the role due to the intense public anger currently directed at large energy companies and their executives, who are accused of profiteering as customers’ bills rise.
“[Centrica] has been, and continues to be, in discussions with Iain about the possibility of him succeeding Sam Laidlaw as chef executive of Centrica…Sam remains firmly focused on leading Centrica until his successor is in place,” said the firm, which owns the UK’s largest supplier, British Gas.
BP lifer Conn heads the firm’s downstream business, which includes refining and petrol stations.
Conn is in line for up to £15m from long-term incentive plans at BP and it has been speculated that this was a key sticking point in negotiations with Centrica, which could not match the payout without angering shareholders and customers.
If appointed, Conn will join Centrica at a challenging time. The company has seen its share price fall by nearly a fifth over the past year, after issuing two profit warnings in six months.
Last September, Labour leader Ed Miliband vowed to freeze energy prices if elected, sparking off a highly-charged debate into consumers’ bills and the cost of living.
The Competition and Markets Authority confirmed yesterday that it is launching a full-scale investigation into competition in the retail energy market, which could even lead to Centrica being broken up. Centrica’s shares closed 0.7 per cent higher.
PROFILE: FROM OIL TRADER TO TOP DOG
Iain Conn joined BP in 1986 and knows the company like the back of his hand. Starting as an oil trader, he has worked in both the upstream and downstream divisions of the business, taking him to the US and Colombia. He joined the board in 2004 and became chief executive of downstream in June 2007.
In his role as head of downstream, Conn is as consumer facing as it gets working for an oil company, which will hold him in good stead if he gets the Centrica job. He oversees all BP’s European marketing activities, including petrol stations, alongside refining.
Working at BP during the infamous Gulf of Mexico oil spill in 2010 – the largest US offshore oil disaster in history – Conn is no stranger to scandal. But Conn wasn’t the chief executive of BP; whether he can ride the storm as the captain of the ship is another matter.
“Centrica at heart is a mass-market consumer business with supporting upstream operations. In our view, investors will be weary of seeing Centrica undertake yet a further shift of capital towards upstream oil and gas operations,” warned Liberum research.
“Given his background Conn will need to convince investors that he is indeed capable of extracting more value from Centrica's huge customer base on both sides of the Atlantic.”
Oh and if you were wondering, Conn was paid £3.67m last year, compared to Laidlaw’s £4.13m pay package in 2013.