British Gas owner Centrica faces pay revolt from top City firm
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The owner of British Gas is facing criticism from a leading City investor over the multimillion pound pay package handed to its chief executive after persistent criticism of windfall gains triggered by share price collapses during the pandemic.
Sky News can reveal that abrdn, one of the London stock market’s most influential institutional shareholders, will vote against Centrica’s remuneration report later this month amid discontent about long-term incentives awarded during the COVID-19 crisis.
Chris O’Shea, Centrica’s CEO, was paid £4.5m last year despite controversy about energy suppliers’ profits and a scandal involving its treatment of customers using pre-payment meters.
The head of active ownership at abrdn, Andrew Mason, said it had decided to oppose Centrica’s remuneration report both because of its CEO’s windfall bonus and the pre-payment meter crisis.
“In 2020 the CEO received a Long-Term Incentive Plan grant which was not meaningfully reduced to reflect the depressed share price during Europe’s initial response to the COVID-19 pandemic,” Mr Mason said.
“This has resulted in a windfall award to the CEO valued at £2.26m.
“Second, the company has awarded the CEO a generous annual bonus of £1.42m which we do not regard as reflective of the impact of forced prepayment installations on vulnerable customers during the ongoing cost of living crisis and the current ongoing probe by Ofgem.
“We are concerned that the remuneration committee’s decisions harm the reputation of the company, fail to reflect the experience of vulnerable customers, and are misaligned with shareholder interests.”
Although it owns just 0.5% of Centrica’s shares, abrdn’s stance underlines the sensitivity of City investors to perception of excess gains arising from the share price slumps seen across the economy during the pandemic.
The prospect of a large-scale revolt against Centrica’s remuneration report, however, is slim: both Glass Lewis and Institutional Shareholder Services, the two biggest proxy advisers, have recommended voting in favour of the resolution.
Centrica declined to comment.
