BG defends chief’s £28m pay bonanza
BG GROUP has defended its chief executive’s stratospheric pay package ahead of a vote on remuneration by shareholders at its annual general meeting in May.
Frank Chapman more than doubled his compensation to £28m in 2009 after exercising a large chunk of share options. Although his basic salary and bonus came to £2.7m, the bulk of Chapman’s haul came from vesting £15.5m of paper options accrued over a decade.
The payday comes at a sensitive time for FTSE 100 remuneration committees. Last week, CBI director-general Richard Lambert warned high-flying executives risked being seen as “aliens” by the general public if they continued to bank ever-increasing rewards.
Lord Mandelson, the business secretary, also drew attention to pay levels over the weekend when he accused Barclays Capital president Bob Diamond of representing “the unacceptable face of banking” after he took home £60m last year.
Institutional investors are due to vote on BG’s remuneration recommendations at the company’s AGM on 12 May. Lord Myners, the City minister, has tried to encourage fund managers to take a more active approach in engaging with boards over setting pay levels.
Last night a City insider said: “Remuneration has got to be linked to performance, and companies have got to be sensitive to the wider economic situation.”
But BG remained defiant. A spokesperson said Chapman’s bonus was cut slightly from £1.9m in 2008 to £1.6m due to poorer performance on a range of measures as determined by the oil explorer’s remuneration committee, chaired by Baroness Hogg.
She pointed out the majority of 2009’s package came in the form of shares deferred over the course of several years and said regular conversations with shareholders would continue as usual in the run-up to the AGM.
BG’s shares have risen 69 per cent in the past three years, and have beaten the FTSE 100 by a significant margin over five years.
Over the past 12 months they are up 6.2 per cent, closing at £11.66 on Thursday.