Institute of Directors (IoD) yesterday slammed BG Group’s plans to hand new chief executive Helge Lund a £25m pay deal, warning that it threatened to damage the reputation of British business if approved by shareholders next month.
Simon Walker, the lobby group’s director general, called the controversial pay-package “excessive, inflammatory and contrary to the principles of good corporate governance.
“This pay deal would do serious damage to the reputation of British business six months ahead of a general election and at a time when the reputation of UK plc is still suffering. It is a red rag to the enemies of the free market. We urge shareholders to call BG’s bluff,” he added.
The Investment Management Association, the shareholder body, has also voiced concerns this week after issuing a “red top” alert – its most severe warning against a company’s plan.
Lund quit his job as chief executive of Norway’s state-controlled oil company Statoil to take on the top role at smaller rival BG, where he is due to start in March.
The British gas and oil producer has promised Lund a pay package that includes a £12m golden hello in shares and the chance to earn up to £14m a year if he achieves performance targets and helps turn the flagging company around.
The package – which will be put to a shareholder vote on 15 December – would make Lund one of the best-paid bosses of a publicly-listed company in Britain and BG has argued that the price is worth paying to lure one of the industry’s top executives.
“Lund is ideally suited to lead BG Group given his strong track record, skills and experience as a leading oil and gas industry chief executive,” a spokesperson for BG said last night.
Shares fell one per cent to 1,050p.