Shareholders in the British Gas owner Centrica have approved its chief executive’s £4.5m pay packet, which had been labelled a “slap in the face” for struggling bill payers.
The company said 93% of votes at its annual meeting in Leeds on Tuesday were in favour of approving Chris O’Shea’s remuneration, despite controversy over the prepayment meter scandal and ballooning profits made by energy firms during the cost-of-living crisis.
Before the meeting, Centrica said annual profits were expected to come in at the top end of estimates, driven by “significantly higher” earnings at its retail division.
Centrica’s profits tripled last year to an all-time high of £3.3bn, after Russia’s invasion of Ukraine drove oil and gas prices sharply higher and contributed to a rise in household energy bills.
The Unite union had urged Centrica shareholders to reject the remuneration package for O’Shea, including what it called an “obscene” bonus.
On top of his annual salary of £790,000, O’Shea will receive bonus payouts of £3.7m, including £1.4m in cash and a long-term share bonus of £2.3m. Last year, he waived a £1.1m bonus, saying he could not take it “given the hardships faced by our customers”.
The board was not asked by shareholders at the meeting about the decision to pay O’Shea the bonus.
When details of the pay packet became public in March, it was condemned by consumer groups and unions. Alice Harrison, of campaign group Global Witness, described it as “a slap in the face to all those who have been struggling with the sky-high cost of energy”.
It emerged after British Gas suspended the forced installation of prepayment meters in February because of concerns over its treatment of vulnerable customers, and is subject to an investigation by the energy regulator for Great Britain, Ofgem. Agents acting for the company made a third of all warrant of entry applications in England and Wales last year, the Guardian revealed.
At Tuesday’s meeting, O’Shea said he was “genuinely gutted and truly sorry that our actions had fallen short of the high standards that we set ourselves”. He said an external investigation found there was “no systemic issues at British Gas” but “there are clearly lessons to be learned”.
Unite’s general secretary, Sharon Graham, had said O’Shea’s bonus was “just one glaring example of the epidemic of profiteering afflicting the country. Corporate greedflation is breaking our economy and something needs to be done about it.”
An influential shareholder, abrdn, revealed before the meeting that it would vote against Centrica’s remuneration report. It said the long-term incentive plan grant awarded to O’Shea in 2020 was not “meaningfully reduced to reflect the depressed share price during Europe’s initial response to the Covid pandemic”.
Abrdn added that it did not regard the bonus as “reflective of the impact of forced prepayment installations on vulnerable customers during the ongoing cost-of-living crisis and the current ongoing probe by Ofgem”.
Centrica told the meeting that talks with government over increasing the capacity of its Rough gas storage facility in the North Sea – and ultimately turning it into a hydrogen storage facility – had stalled. “We are always open to conversations with the government about increasing that,” O’Shea said.
The board was asked why consumers who did not want smart meters were being asked to have them installed. O’Shea asked them to write to the energy regulator, Ofgem, and said: “We are in a very odd situation. Smart meters are voluntary but we have targets imposed on us by our regulator.
“So while people can refuse to have smart meters installed, if we don’t install a certain number of smart meters our regulator will fine us. The regulator is looking to fine us for not installing enough smart meters last year.”
