British Gas owner Centrica has fended off a potential shareholder revolt over its chief executive’s £8.2 million pay deal last year, as campaigners branded the pay packet “fundamentally wrong”.
Chris O’Shea saw his pay package nearly double from £4.5 million in 2022.
His latest deal for 2023 netted the chief executive an £810,000 salary, a £1.4 million annual bonus and £5.9 million in long-term bonus, pension and benefits.
Pensions and Investment Research Consultants (Pirc), the shareholder advisory group, had advised investors to vote against Centrica’s remuneration report, including Mr O’Shea’s pay package, at the company’s annual general meeting on Wednesday.
But 90.1% of shareholders voted in favour of the measures, with 9.9% voting against.
Mel Evans, Greenpeace UK’s climate team leader, said: “This is a direct transfer of wealth from people struggling to pay their bills to energy bosses and their shareholders.
“It’s fundamentally wrong that Chris O’Shea is able to profit obscene amounts from an energy crisis that hits ordinary people hardest.
“And it is yet more evidence that our energy system is not fit for purpose.
“We desperately need an energy system fit for the 21st century, one powered entirely by cheap renewables that would lower peoples bills, give us energy security, and help the climate at the same time.”
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”.
That was before Centrica announced his 2023 pay packet of £8.2 million, up £3.7 million on the 2022 deal.
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.
