Centrica increased the total pay for former chief executive Sam Laidlaw to £3.4m for his final year despite the embattled British Gas owner slashing its dividend for the first time.
Laidlaw’s total pay for 2014 was 52% higher than the £2.2m he was paid the year before, Centrica’s annual report showed. The main difference was a £1.4m payment under Centrica’s long-term share plan. There was no such payout for 2013.
Laidlaw’s salary increased to £967,000 from £950,000 and his cash bonus fell to £592,000 from £851,000.
Centrica cut the 2014 final dividend for its 650,000 small shareholders by 30% and blamed warm weather and falling oil prices for annual profits falling by more than a third. It was the first time Centrica had cut the dividend since the company was created in 1997.
Laidlaw announced his departure from Centrica last July but he stayed on as chief executive until the end of 2014.
He was awarded the long-term share payment because he was deemed to have retired from the company. He may qualify for smaller payments in each of the next two years under the plan if he does not take an executive job with a FTSE 100 company.
Laidlaw donated his 2013 bonus to charities helping people struggling to pay energy bills in an attempt to ease some of the political pressure on the company over high household bills. He is said to be doing the same with his smaller bonus for 2014.
Laidlaw’s £4.3m pay caused an investor rebellion during the so-called shareholder spring of 2012 as Centrica’s profit flatlined and political pressure mounted over rising household fuel bills. His pay for last year, combined with the cut to the dividend, could set the company up for a difficult annual meeting on 27 April.
Centrica unveiled a new executive bonus scheme in the annual report that it said would line up bosses’ pay more closely with the interests of shareholders. The new plan sets the maximum amount the company’s new boss Iain Conn can make in a year at £6.3m compared with £7.2m for Laidlaw.
The company also warned that the risk of political or regulatory action had increased over the past year as tensions increased over the prices suppliers charge hard-up consumers compared with the falling price the companies pay for gas in the energy markets.
With the opinion polls tight before next month’s general election, the big energy providers face potential political intervention over household bills. Labour has said it would cap prices for 20 months after the election while it overhauls the regulatory regime for the sector to give consumers a better deal.
The Competition and Markets Authority said last month that the big energy companies charged loyal, often vulnerable, customers £234 a year more than those who shopped around. Ofgem, the energy regulator, said in January that the energy suppliers were failing to pass the falling oil price on to customers and were instead using lower costs to make bigger profits.
The regulator said on Thursday that suppliers had passed on less than half of falling market costs to customers. The cost of the average dual fuel bill for the next year fell £6 in March to £1,295 but the big suppliers’ costs for providing the energy fell by £13, Ofgem calculated.
Centrica’s chairman, Richard Haythornthwaite, wrote in the annual report: “The UK will witness the lead-up to the UK general election and the public focus will remain on the affordability of energy supply. In addition, the regulatory environment in which we operate will continue to be demanding in all our geographies with the Competition and Markets Authority investigation in the UK due to report its findings in December 2015.”
