British Gas owner Centrica has fended off a potential shareholder revolt over its chief executive’s £8.2m pay deal last year, with activists branding the pay arrangement “fundamentally wrong”.
Chris O’Shea’s salary package has almost doubled from £4.5 million in 2022.
His latest contract for 2023 gave the CEO a salary of £810,000, an annual bonus of £1.4 million and £5.9 million in long-term bonuses, pensions and benefits.
Pensions and Investment Research Consultants (Pirc), the shareholder advisory group, had advised investors to vote against Centrica’s remuneration report, including Mr O’Shea’s pay package, at the company’s annual general meeting on Wednesday.
However, 90.1 percent of shareholders voted for the measures and 9.9 percent against.
Mel Evans, head of Greenpeace UK’s climate team, said: “This is a direct transfer of wealth from people struggling to pay their bills to energy bosses and their shareholders.”
“It is fundamentally wrong that Chris O’Shea can make obscene profits from an energy crisis that hits ordinary people hardest.
“And it is further proof that our energy system is not fit for purpose.
“We urgently need an energy system that is fit for the 21st century. A system that runs exclusively on cheap renewable energy, that lowers people’s energy bills, gives us energy security and helps the climate at the same time.”
Mr O’Shea said in January that there was “no point” in trying to justify his salary for 2022, sparking controversy as households across the UK suffered painfully high energy bills.
At the time, he described his combination of salary, bonus and shares as a “huge amount of money” and said he was “incredibly lucky.”
That was before Centrica announced its 2023 pay package of £8.2 million, £3.7 million more than for 2022.
The majority of the increase is due to the CEO’s long-term bonus, which has increased largely due to Centrica’s rising share price over the past three years.
Centrica’s adjusted profit before tax fell to £2.8 billion last year, compared with £3.2 billion the year before, the company said in February.
The retail arm, which consists mainly of British Gas, saw profits rise from £94 million in 2022 to £799 million last year.
Centrica shares have risen over 14% in the last 12 months.
The company’s annual report said the pay increase was due to “sustained improvements in underlying performance and significant share price growth” at Centrica.
Carol Arrowsmith, chair of Centrica’s remuneration committee, said earlier this year the company needed to “retain high-performing leaders who can lead this large and complex business”.
She added that his salary was “based on the terms and conditions of his employment.”
The structure of the deal “has been approved by our shareholders and is consistent with the structure of similar companies,” Ms Arrowsmith added.
Centrica had previously said its residential utility arm would return to “sustainable” profit levels in 2024 – two years earlier than planned – as energy markets begin to return to normal.
The energy giant welcomed a “more normal external environment” as energy markets recovered from the crisis and price shock caused by the war between Russia and Ukraine.
Energy regulator Ofgem announced in May that the average household energy bill would fall by 7% from July due to falling wholesale costs.
The regulator cut the price cap for a typical dual-fuel household in England, Scotland and Wales to £1,568, a reduction of £122 in a year.
