BG Group investors have rebelled against the pay deal for the company’s boss, Helge Lund, after an annual meeting where the package, worth up to £25m, was branded “outrageous” by one shareholder.
Just under one in five failed to back the pay report and more than 15% opposed the re-election of Sir John Hood as chairman of the remuneration committee.
The vote came as Andrew Gould, the chairman, told the meeting the board had misjudged the public reaction to Lund’s pay package, but declined the shareholder’s invitation to apologise and said the deal was necessary to get Lund to join.
Lund had been hired from Norway’s Statoil to overhaul the underperforming company, but the outrage over his pay deal intensified when BG agreed to be bought by Shell for £47bn last month, only weeks after he joined. Some investors argued he would now earn a fortune for merely keeping the company ticking over before Shell’s purchase completes next year, at which point Lund is to leave.
Lund told the meeting: “From a leadership perspective, I do have slightly mixed emotions and I was looking forward to taking BG forward. A takeover was certainly not in my mind when I joined.”
The size of the shareholder rebellion was large given that many City fund managers were unwilling to rock the boat with the Shell takeover going through. Shell is paying a 52% premium on BG’s market value before the offer was announced.
Hood said it would not be clear until the end of the year how much Lund stood to collect when he leaves, but at BG’s annual meeting, Mark Bentley, from the small shareholder group ShareSoc, said he could receive £11.7m.
To applause from the floor, he said: “This really represents an outrageous sum in the current climate. It’s a contribution to the ratcheting up of executive pay across FTSE 100 companies … I really think the remuneration committee has let shareholders and UK plc down in agreeing this massive package for the CEO and may I request an apology from the remuneration committee?”
Gould replied: “All decisions around Mr Lund’s … package were made by the board as a whole. Therefore, if an apology is due it has to come from the board as a whole.”
Gould said the board underestimated the “amount of public interest and shareholder angst” that Lund’s proposed pay deal caused. “If we misjudged something, we misjudged the public reaction to it.”
Lund has kept a low profile since joining BG. Asked about the reaction to his pay, Lund said: “I recognise this is an area where there is a lot of focus but that has never been the focus for me in joining BG.”
Lund joined for the management challenge of improving the company, he said.
