Shareholders in British Gas owner Centrica have approved a nearly £4 million pay rise for its chief executive, despite him saying he could not justify a previous, smaller pay deal last year.
Chris O’Shea’s pay package for 2023 is £8.2 million, consisting of an £810,000 salary, a £1.4 million annual bonus and £5.9 million in long-term bonus, pension and benefits.
The deal represents nearly double his pay in 2022, which was £4.5 million.
Mr O’Shea said in January there was “no point” trying to justify his 2022 salary, which sparked controversy as households across the UK suffered amid painfully high energy bills.
He described his combination of salary, bonus and shares as “a huge amount of money” at the time, and said he was “incredibly fortunate”.
Pensions and Investment Research Consultants (Pirc), the shareholder advisory group, said it believed investors should vote against Mr O’Shea’s pay package for 2023 at the AGM.
But 90.1% of shareholders voted in favour of the pay rise, with 9.9% voting against.
Most of the increase comes from the chief executive’s long-term bonus, which rose mainly because of Centrica’s rising share price in the last three years.
Centrica’s adjusted profit fell to £2.8 billion before tax last year, compared with £3.2 billion the year before, the business revealed in February.
Its retail arm, which is mainly made up of British Gas, saw profit soar from £94 million in 2022 to £799 million last year.
Centrica shares are up over 14% in the last 12 months.
The company’s annual report said the pay rise was down to Centrica’s “continued improvements in underlying performance and substantial share price growth”.
Carol Arrowsmith, the chairwoman of Centrica’s remuneration committee, said earlier this year that the company needed to retain “high-performing executives who can lead this large and complex business”.
She added that his pay was “based on the terms he was appointed on”.
The structure of the deal “was approved by our shareholders, and it is consistent with similar companies,” Ms Arrowsmith added.
It comes after Centrica said its household supply arm will be back to a “sustainable” level of profit in 2024, two years earlier than planned, as energy markets begin to return to normal.
The energy giant cheered a “more normalised external environment” as energy markets recover after the crisis and price shock caused by Russia’s war with Ukraine.
Energy regulator Ofgem announced in May that the average household energy bill is to fall by 7% from July due to falling wholesale costs.
The regulator dropped its price cap to £1,568 for a typical dual-fuel household in England, Scotland and Wales, a drop of £122 over the course of a year.
