A leading British energy firm has come under fire for offering its new boss a £25million pay package. Helge Lund, who will take over as BG Group’s chief executive in March, will receive £12million in shares on top of a lavish remuneration package of up to £13million a year. The deal, by British Gas’s former oil and gas division, was condemned yesterday as ‘excessive and inflammatory’ by shareholders and business leaders. Helge Lund, pictured, will receive £12 million in shares a year on top of his £13 million pay package . Two major investment advice firms have criticised the move, and the Institute of Directors (IoD) launched a withering attack on the scale of the deal. In a highly unusual intervention, IoD director general Simon Walker said the arrangements ‘bring the whole of British business into disrepute’. He added: ‘It is excessive, inflammatory and contrary to the principles of good corporate governance. ‘This pay deal would do serious damage to the reputation of British business six months ahead of a general election and at a time when the reputation of UK plc is still suffering. ‘It is a red rag to the enemies of the free market.’ He also pointed out that the awards were out of kilter with the size of the company, because chief executives at much larger rivals – such as Shell and BP – have smaller pay packages. Two respected shareholder advisory groups – which provide guidance to investors on how to vote on technical issues – have come out in opposition to the deal. Institutional Shareholder Services, whose clients include major City fund managers, yesterday advised investors to oppose the move at next month’s meeting. And the Investment Management Association, another advisory firm, has issued a ‘red top’ alert – its most serious warning signal about corporate governance breaches. Top ten shareholder Legal & General has also criticised the deal, saying that allowing executives to negotiate additional rewards on top of established annual pay packages ‘opens up a can of worms’. Mr Lund, 52, was recruited from Norwegian oil firm Statoil where he was chief executive. Simon Walker, pictured, of the Institute of Directors described Mr Lund's package as 'excessive' He will not be able to take possession of his free shares for three years and will be barred from selling until he leaves the firm. One of BG Group’s top ten shareholders, speaking on the condition of anonymity, said that investors were being put under pressure to support the deal. The firm has insisted it must spend money on hiring internationally in order to recruit the best talent. But the investor said shareholders are being ‘held to ransom’, because refusing to support the vote could see Mr Lund refuse to join the company. This would jeopardise BG Group’s future and lead to an immediate drop in its share price, the source added. Last night a spokesman for the company defended the pay package, saying: ‘We believe Helge Lund is the right person to lead BG Group. ‘His proposed remuneration is competitive in the international oil and gas industry. ‘The shareholder vote on Helge Lund’s pay is in line with the letter and spirit of corporate governance legislation.’ The firm was created in 1997 when British Gas split into Centrica, which deals with domestic supplies, and BG Group, which manages oil and gas fields and exploration.
Helge Lund will receive £12 million in shares on top of £13 million pay .
Mr Lund will take over as BG Group's chief executive in March .
He was previously with the Norwegian oil company Statoil .
The Institute of Directors condemned the size of Mr Lund's pay package .
The £25 million deal was called ' a red rag to enemies of the free market'
A leading British energy firm has come under fire for offering its new boss a £25million pay package. Helge Lund, who will take over as BG Group’s chief executive in March, will receive £12million in shares on top of a lavish remuneration package of up to £13million a year. The deal, by British Gas’s former oil and gas division, was condemned yesterday as ‘excessive and inflammatory’ by shareholders and business leaders. Helge Lund, pictured, will receive £12 million in shares a year on top of his £13 million pay package . Two major investment advice firms have criticised the move, and the Institute of Directors (IoD) launched a withering attack on the scale of the deal. In a highly unusual intervention, IoD director general Simon Walker said the arrangements ‘bring the whole of British business into disrepute’. He added: ‘It is excessive, inflammatory and contrary to the principles of good corporate governance. ‘This pay deal would do serious damage to the reputation of British business six months ahead of a general election and at a time when the reputation of UK plc is still suffering. ‘It is a red rag to the enemies of the free market.’ He also pointed out that the awards were out of kilter with the size of the company, because chief executives at much larger rivals – such as Shell and BP – have smaller pay packages. Two respected shareholder advisory groups – which provide guidance to investors on how to vote on technical issues – have come out in opposition to the deal. Institutional Shareholder Services, whose clients include major City fund managers, yesterday advised investors to oppose the move at next month’s meeting. And the Investment Management Association, another advisory firm, has issued a ‘red top’ alert – its most serious warning signal about corporate governance breaches. Top ten shareholder Legal & General has also criticised the deal, saying that allowing executives to negotiate additional rewards on top of established annual pay packages ‘opens up a can of worms’. Mr Lund, 52, was recruited from Norwegian oil firm Statoil where he was chief executive. Simon Walker, pictured, of the Institute of Directors described Mr Lund's package as 'excessive' He will not be able to take possession of his free shares for three years and will be barred from selling until he leaves the firm. One of BG Group’s top ten shareholders, speaking on the condition of anonymity, said that investors were being put under pressure to support the deal. The firm has insisted it must spend money on hiring internationally in order to recruit the best talent. But the investor said shareholders are being ‘held to ransom’, because refusing to support the vote could see Mr Lund refuse to join the company. This would jeopardise BG Group’s future and lead to an immediate drop in its share price, the source added. Last night a spokesman for the company defended the pay package, saying: ‘We believe Helge Lund is the right person to lead BG Group. ‘His proposed remuneration is competitive in the international oil and gas industry. ‘The shareholder vote on Helge Lund’s pay is in line with the letter and spirit of corporate governance legislation.’ The firm was created in 1997 when British Gas split into Centrica, which deals with domestic supplies, and BG Group, which manages oil and gas fields and exploration.
package. Helge Lund, who will take over as BG Group’s chief executive in March, will receive million in shares a year on top of his £13 red rag to the enemies of the free market.’ He kilter with the size of the company, because Norwegian oil firm Statoil where he was chief Institute of Directors described Mr Lund's