BG Group’s plan to reward its next chief executive with a pay deal worth £25million is causing growing unrest among investors.
The Investment Management Association (IMA), whose members manage more than £5trillion of assets on behalf of UK and overseas clients, has issued a “red top” warning.
Legal and General – one of the biggest investment businesses in the UK – has also raised concerns about the offer to Helge Lund, who takes the helm at BG in March.
Mr Lund, who has been likened to Real Madrid and Portuguese footballer Cristiano Ronaldo because of his superstar status in the global oil and gas industry, is to get a £12million “golden hello” in shares and the chance to earn £13.5million a year if he hits performance targets.
His last job was as chief executive of Norway’s Statoil, which he transformed during his 10-year stint at the helm.
Such is his kudos on the international scene, he has advised UN secretary generals on sustainability issues.
He left Statoil in October, giving up a £1.5million salary to go to BG, which has its headquarters in Reading and employs around 5,200 people in oil and gas operations in 24 countries.
BG shareholders will meet on December 15 to vote on the conditional award of shares to Mr Lund.
In a recent circular to investors, the group said: “The company has consulted extensively with shareholders about Mr Lund joining BG Group and the proposed remuneration package.
“Shareholders have overwhelmingly welcomed the appointment, supporting the view that Mr Lund has the necessary skills and experience to lead BG Group.”
The circular sets out factors that will be used to assess his personal performance, adding: “The board believes that the package is structured in a way which will drive excellent business and financial performance across the group and promote the long-term success of the company.
“Approximately 80% of Mr Lund’s proposed annual remuneration package is subject to company and personal performance conditions.”
The company advised shareholders to back the pay deal, saying Mr Lund was ideally suited to lead BG Group because of his “strong track record, skills and experience as a leading oil and gas industry chief executive”.
A spokesman for BG yesterday said the £13.5million part of the overall pay deal, which includes a £1.5million salary, was at the top end of Mr Lund’s potential pay in the job.
The figure is more likely to be around £9million, the “median CEO package for the global oil and gas industry”, he added.
IMA refused to comment on the reasons for its red top alert, its most serious warning on corporate governance breaches.
L&G, which owns 2.7% of BG, is unhappy that Mr Lund’s remuneration is a departure from a three-year pay policy approved by shareholders earlier this year.
Aviva Investors has said it is also concerned about the deal and will be talking to BG before next month’s meeting.
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