Centrica in showdown over chief’s £8.2m pay

Bumper pay: Centrica boss Chris O’Shea

British Gas’s owner is facing a showdown with shareholders over plans to hand its chief executive an £8.2million pay and bonus package.

Centrica has come under fire from campaigners for giving Chris O’Shea such large rewards as millions of gas and electricity users are still battling the cost-of-living crisis, including high utility bills.

Centrica’s board will face its investors at the company’s annual meeting (AGM) on Wednesday. 

Pirc – a research group that advises investors how to vote on issues including executive pay – has urged shareholders to vote against O’Shea’s pay for 2023.

O’Shea has opened himself up to accusations of hypocrisy as he previously said it was ‘impossible to justify’ the £4.5million he was paid in 2022, then accepted almost double that amount.

Centrica has hundreds of thousands of individual investors, many of whom will be annoyed by O’Shea’s latest deal.

Amit Vedhara, director at ShareSoc, a lobby group for small investors, said Centrica’s pay packages for 2023 did not appear to be justified. 

He said: ‘If this was a one-off and shareholders were also rewarded with a one-off benefit, it would be different.’

He added that parts of the company had profited from ‘windfalls’ when energy prices rose – even though many customers struggled to pay bills.

O’Shea, who has led the company since 2020, received a salary of £810,000 last year.

His pay also included a £1.4million annual bonus and a £5.9million long-term bonus, as well as pension and benefits.

Meters: British Gas used a controversial agency that fitted energy pre-payment meters in elderly and vulnerable resident’s houses by force

A small amount of his bonus was docked following a scandal over the use of debt collectors. 

British Gas used a controversial agency that fitted energy pre-payment meters in elderly and vulnerable resident’s houses by force – though it cut ties after a public backlash.

Tim Bush, head of governance and financial analysis at Pirc, said: ‘Chris O’Shea has himself said he is paid too much.’

He blamed badly-designed pay schemes, which mimic those in the US, where executives are paid even more than here.

Luke Hildyard, director at think tank the High Pay Centre, said: ‘Good leadership matters but lots of other factors also contribute to companies’ success, like the economic and geopolitical context or the contribution of the wider workforce or changes in society’s tastes and needs.

‘Most high earners aren’t really the superhuman leaders they’re depicted to be – they’ve just been given the education, training, networks and confidence opportunity to do a top job.’

But one top ten shareholder told the Mail they believed O’Shea deserved the high pay as he went without bonuses in earlier years and ‘managed to navigate the business through some extremely difficult and choppy waters’. 

O’Shea did not take a bonus in 2019, when he was finance chief.

Nor did he accept a payout in 2020 and in 2021, he turned down a £1.1million bonus in solidarity with what he described as the ‘hardships’ faced by customers.

Carol Arrowsmith, chairman of the pay committee, said the company needs to ensure it is ‘set up for success in the long-term and that means attracting and retaining high performing executives who can lead this large and complex business’.

She added that the way O’Shea’s pay packet is calculated is based ‘on the terms he was appointed on’ and the structure was ‘approved by shareholders’.

Investors have already taken aim at a number of bosses this year. 

But there is a growing debate in the City about whether British bosses should be allowed to receive lavish bonuses and higher salaries that would bring the UK more in line with the US.