Golden Parachute is an expression describing a contract clause given to a top executive of a company, guaranteeing a hefty payment in case the company gets taken over by another company and the executive loses his job.
Helge Lund (photo), the CEO of the UK-based oil and gas firm BG Group could get just that, as his company is being taken over by Shell in a transaction valued at around $70 billion.
He has been at the helm of the company since February 2015, after coming from Statoil where he had been the CEO for a decade.
To remind, he had been offered a “golden hello”, by BG Group, valued approximately $25 million pounds, an amount disputed by the shareholders and later revised. Similar to the previously mentioned ‘golden parachute’, ‘golden hello’ is a lucrative signing bonus offered to an employee of a rival company aiming to lure him/her to leave the competing firm.
Now, after only two months in the office, Lund is getting ready to leave due to the company being taken over. According to Lund’s remuneration package at BG, he is entitled to get a base salary of £1.5 million, fixed for the first five years of employment. Also, Lund could get a 130% of salary on termination of the contract, expected to happen in early 2016, once the Shell-BG transaction is completed.
However, according to Reuters, the Norwegian could receive as much as 32 million pounds ($47.8 million) by the time he is out of BG. In its calculation, apart from the base salary and the termination fee, Reuters included long-term incentive share awards, bonuses, shares Lund already owns, and stock options he has in BG.
In a statement sent to Bloomberg, a BG Group spokesperson said that the value of the shares Lund owns is subject to the company’s performance up to the transaction completion.
Commenting on the Shell takeover offer, Lund said yesterday: “The offer from Shell delivers attractive returns to shareholders and has strong strategic logic. BG’s deep water positions and strengths in exploration, liquefaction and LNG shipping and marketing will combine well with Shell’s scale, development expertise and financial strength.”
“The consolidated business will be strongly placed to develop the growth projects in BG’s portfolio. The transaction will take time to complete, during which my team and I will remain committed to BG and our shareholders, and to safely delivering our 2015 business plan.”
Offshore Energy Today Staff