The BG Group chief executive, Helge Lund, has admitted he understands the scrutiny of his controversial £25m pay package as he prepares to quit the business after joining three months ago.
Almost one in five votes at the gas producer’s annual meeting failed to support its pay report on Tuesday and more than 15% of votes were withheld from the chairman of the remuneration committee in protest at Lund’s pay.
The deal to lure Lund from Norway’s Statoil caused a shareholder revolt in November and forced a partial climbdown by BG. Investor anger resurfaced after Shell agreed to buy BG for £47bn last month, only weeks after Lund joined, meaning he could receive a fortune for working one year.
Announcing his first set of results as BG’s boss, Lund said: “I understand the interest in the subject [of pay] and I also [understand] that it comes with the role of being a public company chief executive. I support transparency and the right of shareholders to voice their view on any issue but it is difficult for me to comment on my own remuneration.”
At the annual meeting, BG’s chairman, Andrew Gould, declined a shareholder’s invitation to apologise over the pay deal, conceding only that the board had failed to anticipate the size of the reaction among shareholders and the public.
BG’s first-quarter results showed how fiercely the drop in the oil price, which dictates the price of gas, hit its business. In the first three months of 2015, core earnings fell 41% to $1.6bn (£1bn) as revenue and other income fell 21% to $4bn.
Lund, who joined BG on 9 February, declined to say whether he would consider waiving any of his pay or giving some to charity when he is paid next year. He plans to leave after Shell’s takeover completes early in 2016.
“I understand the interest, again, and I also would like to underline that this is performance-related so we don’t know at this stage because it is driven by performance metrics.”
Some shareholders have said that because Lund was hired to turn around BG and that his job was now more of a caretaker role, it was not clear how the remuneration committee would judge his performance.
Lund said his job, unless the Shell deal fell through, would be to hand over a company performing well and to put BG employees in line for jobs at the merged group.
He said he had not expected BG to be taken over when he joined and that he had “mixed emotions” about the deal. Shell approached BG’s chairman Andrew Gould on 15 March, less than six weeks after Lund took over.
BG agreed to the takeover, worth 52% more than its share price at the time, after the price of oil roughly halved since the summer. But some BG shareholders have questioned the wisdom of the deal now that the oil price has started to recover.
Lund said: “We believe that the offer from Shell represents an attractive offer to our shareholders. Therefore there has been a unanimous recommendation from our board. We assessed [the offer] on a range of different oil and gas prices. There is no change to our view of the offer.”
