Large-scale critiques facing Centrica, the company that oversees FTSE 100's British Gas, due to proposed increases in CEO compensation packages.
Sparking Outrage: Centrica's Controversial CEO Pay Hike
Centrica, the parent company of British Gas, has faced a massive uproar over plans to boost CEO Chris O'Shea's salary, as reported by City AM in March. The CEO's latest paycheck amounted to £4.3m, down from the whopping £8.2m he received the year before.
O'Shea took the helm at Centrica in 2020 and previously earned £4.49m in 2022. His latest salary package includes a base salary of £845,000, £1.4m from the annual incentive plan, and £2m from the long-term incentive plan. In contrast, last year's package consisted of £810,000 in salary, a £1.4m annual bonus, and £5.9m in long-term bonus, with some pension and benefits.
Despite external criticism, Centrica argued that "O'Shea's remuneration is no longer aligned with our peers, and his performance and experience warrant positioning his pay between the median and upper quartile of the FTSE 100." As a result, the company confirmed it will raise O'Shea's salary to £1.1m, effective from 1 April, and increase his maximum RSP (Restricted Share Plan) award from 150% of salary to 200%.
At Centrica's annual general meeting today, close to 40% of votes were cast against the remuneration report. In response, the group pledged to engage with shareholders in open dialogue and provide an update within six months.
British Gas Owner to Address Shareholder Concerns
The owner of British Gas issued a statement to the London Stock Exchange: "We acknowledge the outcome of the vote on resolution two relating to the directors' remuneration report. While we welcome the backing of the majority of our shareholders for that resolution, we will continue to engage with shareholders in constructive and open dialogue."
The outcry stems from the timing and disparity between O'Shea's compensation and the current economic conditions affecting energy bill payers. Despite the backlash, Centrica beat earnings estimates for its latest financial year, posting earnings before interest, taxation, depreciation, and amortization (EBITDA) of £2.3bn, well ahead of analyst expectations of £1.6bn.
[1] Sources: City AM, Centrica's annual general meeting
- Centrica, in response to the backlash from shareholders, pledged to hold open and constructive dialogue with them, promising to provide an update within six months.
- The FTSE 100-listed Centrica argued that the controversial pay hike for CEO Chris O'Shea was necessary because his remuneration wasn't aligned with industry peers, citing his performance and experience as justification.
- Critics argue that the timing and disparity of CEO Chris O'Shea's compensation, amounting to £4.3m, is out of line with the current economic conditions affecting energy bill payers.
- Despite the controversy surrounding his compensation, Centrica's financial performance remains robust, with earnings before interest, taxation, depreciation, and amortization (EBITDA) of £2.3bn for the latest financial year, surpassing analyst expectations.
