Institute of Directors (IoD), a UK-based body that represents and set standards for company directors, has slammed BG Group’s decision to award a £25 million ($39.36 million) pay deal to incoming Chief Executive, Helge Lund.
Simon Walker, Director General of the Institute of Directors, said: “The Institute of Directors is always reluctant to criticise an individual company. However we do have a responsibility to criticise an action that brings the whole of British business into disrepute and threatens already fragile attitudes to corporate Britain. For that reason we state explicitly our strong opposition to BG Group’s recommended £25 million pay deal for its incoming chief executive, Helge Lund. It is excessive, inflammatory and contrary to the principles of good corporate governance.”
Lund will join BG Group in 2015 and, according to IoD, has been awarded a £12 million ‘golden hello’ in shares and the chance to earn up to £14 million a year if he achieves performance targets. This comes on the back of a three year ‘binding’ pay policy approved by BG shareholders just 6 months ago.
Walker continues: “There is no doubt that Mr Lund is a talented Chief Executive, but the pay package and the decision making process behind this is wrong. It will damage the legitimacy and integrity of corporate Britain as a whole by seeking to unpick binding votes cast by the owners of the company.
“The proposal is excessive in the context of BG’s size and sector and relies on equivocal performance conditions.”
“Calling an extraordinary general meeting in order to slip through a pay deal that drives a coach and horses through those arrangements is unacceptable. It cannot be right to put fund managers in a position where, unless they approve excessive pay way beyond agreed policy, their shares will fall in value. We urge shareholders – including investment institutions – to put their credibility and that of the business community first.
“The proposal is excessive in the context of BG’s size and sector and relies on equivocal performance conditions. It rips up the remuneration paper shareholders have only recently endorsed.
“This pay deal would do serious damage to the reputation of British business six months ahead of a general election and at a time when the reputation of UK plc is still suffering. It is a red rag to the enemies of the free market. We urge shareholders to call BG’s bluff.”