British Gas owner Centrica has been slammed by a prominent City investor over the massive pay package awarded to its CEO.
This is following ongoing scrutiny of windfall gains resulting from share price declines during the pandemic.
Sky News has learned Abrdn, one of London’s influential institutional shareholders, intends to vote against Centrica’s remuneration report later this month, expressing discontent over long-term incentives granted during the COVID-19 crisis.
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Despite the controversy surrounding energy suppliers’ profits and a scandal involving the treatment of customers with pre-payment meters, Centrica’s CEO, Chris O’Shea, received £4.5 million in compensation last year.
Andrew Mason, Head of Active Ownership at Abrdn, stated the opposition to Centrica’s remuneration report stems from the CEO’s windfall bonus and the pre-payment meter crisis.
Mr. Mason said: “In 2020, the CEO received a Long-Term Incentive Plan grant that was not appropriately adjusted to reflect the depressed share price during Europe’s initial response to the COVID-19 pandemic.”
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“This has resulted in a windfall award to the CEO valued at £2.26 million.”
He explained: “Secondly, the company has granted the CEO a generous annual bonus of £1.42 million, which we believe does not consider the impact of forced prepayment installations on vulnerable customers during the ongoing cost of living crisis and the current investigation by Ofgem.”
Mr. Mason expressed concerns about the reputational damage caused by the remuneration committee’s decisions, the failure to consider the experiences of vulnerable customers and the misalignment with shareholder interests.
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While Abrdn owns just 0.5 percent of Centrica’s shares, their position highlights the sensitivity of City investors towards perceptions of excessive gains resulting from share price declines during the pandemic.
However, the likelihood of a widespread revolt against Centrica’s remuneration report remains low, as both Glass Lewis and Institutional Shareholder Services, the two largest proxy advisers, have recommended voting in favor of the resolution.
