BG Group shareholders have praised its remuneration committee, after the company gave in to shareholders over new chief executive Helge Lund's hefty £25m remuneration package.
The oil and gas company said this morning it will reduce the planned remuneration package, which the Institute of directors (IoD) has slammed as “excessive, inflammatory and contrary to the principles of good corporate governance” and caused a shareholder revolt last week.
BG Group has scrapped a conditional share award worth around £10m over five years. Under the company’s long term incentive plan, Lund will instead be granted an initial award of shares worth £4.7m, reducing his overall package by around £5m.
Sacha Sadan, director of corporate governance at Legal & General, which owns a 2.7 per cent stake in the company, reacted positively.
We are encouraged to see BG responding positively to shareholders concerns. As long term engaged investors we look forward to the new CEO joining and creating shareholder value for all.
In addition to the initial incentive plan, Lund will receive an annual award of up to £9m, a £1.5m base salary, fixed for the first five years, a 30 per cent cash payment in lieu of pension and a short term annual cash incentive worth 100 per cent of salary for target performance.
BG Group amended Lund's pay “after extensive shareholder consultation” and the chief executive, due to start early next year, has promised not to sell shares while at the company.
The new pay deal comes into line with a pay package previously approved by shareholders, which avoids the need for a vote on the issue at its next meeting, due to take place on 15 December.
The company had initially argued the £25m, which would have made him one of the best-paid bosses of a publicly listed company in Britain, was worth paying to lure one of the industry's top executives.
This morning the IoD praised the decision, saying Lund's pay "now conforms with the policy guidelines agreed by shareholders in May". Simon Walker, its director general, added:
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 Lund’s appointment and wish him and BG well in the challenges they face.