British Gas: Centrica shareholders overwhelmingly back controversial £3.7m bonus package for CEO Chris O'Shea at Leeds AGM

More than 93 per cent of shareholders in British Gas parent company Centrica have voted in support of chief executive Chris O’Shea receiving a bonus package worth almost £3.7m.

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In a statement to the London Stock Exchange this afternoon following the company holding its AGM in Leeds this morning, it was confirmed that only 6.8 per cent of shareholders had voted against a directors’ remuneration report for 2022 which contained details of Mr O’Shea’s pay package.

In addition to a salary of £790,000, he received a bonus of £1.422m and a long-term share bonus of £2.262m. His basic salary has also been increased to £815,000 a year from the start of April. He had not taken a bonus in 2021.

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The vote came after investor abrdn had said it would vote against his pay award, partly on the grounds of the prepayment scandal exposed by The Times which revealed a third party used by Centrica was forcibly installing the meters in the homes of vulnerable customers.

Centrica CEO Chris O'Shea addresses the company's AGM in Leeds.Centrica CEO Chris O'Shea addresses the company's AGM in Leeds.
Centrica CEO Chris O'Shea addresses the company's AGM in Leeds.

It was also a year which has seen British households swallow sharp increases in their energy bills after the Russian invasion of Ukraine sparked a surge in wholesale gas prices.

The Unite union had also called for shareholders to reject the pay package, with general secretary Sharon Graham describing it as “obscene”.

Mr O’Shea told the meeting he had been “gutted” to learn of the prepayment meter scandal and said the company had taken action as a result.

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He said the board had ordered an investigation as soon as it had become aware of the issue. He said the investigation found there were “no systemic issues” but added there were lessons to be learned.

He also told the AGM: "As we reflect on the past year, we must acknowledge it has been a tough year for many of our customers. The Russian invasion of Ukraine contributed to an energy crisis on a scale that we’ve not seen for decades.

"It has had far-reaching consequences for the world and energy security is higher up the agenda than it has ever been before.”

He added the company was delivering “sustainable growth and value for our shareholders”

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Ahead of the AGM, Centrica said profits will be “significantly higher” in its household energy business over the first half of 2023.

The firm said its retail division, which includes British Gas, has been boosted by regulatory changes that allowed it to reclaim some losses from selling at capped prices.

In a trading update ahead of its annual general meeting, Centrica said the first five months of 2023 have been “strong overall” for the company, despite a reduction in wholesale energy prices.

It said group adjusted earnings per share are set to be at the “top end” of analyst expectations for the year.

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The group, which is the UK’s biggest energy supplier, added that “adjusted operating profit in the first half of 2023 is expected to be significantly higher than in previous years” in its retail division.

Centrica said the main cause of this is a positive impact from changes to “allowances in the UK domestic default tariff cap”.

The issue of Mr O’Shea’s remuneration was not raised during shareholder questions at the meeting.

Chair Scott Wheway praised Mr O’Shea’s performance as CEO over the past year in his opening remarks to the AGM.

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He said: “We spoke last year about the marathon we were undertaking to turn around our business. I’m pleased to be able to say that we’ve made incredible progress.

"Although the external environment was favourable for 2022, our strong financial performance was also a result of the incredible hard work Chris and the rest of the central team and have done to simplify and de-risk the business over the past three years allowing us to manage through volatile commodity markets very effectively.”

He added: “I just want to touch on the importance of a strong Centrica for the UK. A strong Centrica allows us to create skilled and well paid jobs. We paid around £1bn in tax on our 2022 profits and a strong Centrica allows us to acknowledge you, our shareholders. We are pleased to be able to reward our 450,000 patient shareholders.”

More than 99 per cent of shareholders voted in favour of a final cash dividend of 2 pence per ordinary share.