BG Group PLC's chief executive and other executive directors have asked not to be considered for performance bonuses for 2012, even though they would have been eligible, following the company's revised outlook for 2013 and subsequent share price fall, according to the annual report published Thursday.
The move comes as investors, including the big institutions that control many of the U.K.'s largest companies, have become increasingly vocal over executive pay. Banks have been the most severely criticized for awarding bonuses even amid losses, but companies as diverse as British Gas owner Centrica PLC, advertising agency WPP and shipping group Clarkson have also faced shareholder anger over pay awards in the past year.
"The subject of executive reward continues to be an area of focus for shareholders and the wider public," the chairman of BG Group's remuneration committee, John Hood, said in his statement in the annual report.
"The committee believes it is essential that BG Group's remuneration policy is clearly aligned with the interests of shareholders," he said.
Shares in one-time investor darling BG Group plummeted in October last year after the company said a series of delays on key projects meant its oil and natural gas production would grow less than expected in 2012 and not at all in 2013. BG Group's growth outlook was previously one of the best among large oil and gas companies and the shock news sent its shares down to its lowest level in more than three years.
The company has since said it has put recovery plans in place, in particular for Egypt and the U.K., and is focusing on delivering progress on major projects in Brazil and Australia. But although the company's share price has recovered somewhat, it is still down around 14% compared with where the company was trading Oct. 30, 2012 when the revision to 2013 production growth was revealed.
Mr. Hood said the underlying performance of the business in 2012 relative to the annual bonus performance metrics was "solid." In most of the areas outlined in the report against which the executives were assessed, they either met or exceeded targets and would have been eligible for a bonus.
However, the executive directors and former Chief Executive Frank Chapman all concluded that in recognition of the revision of BG's anticipated production growth for 2013 and the share price fall in the final quarter of last year, it would be "inappropriate" for them to be considered for a bonus, Mr. Hood said.
"The committee agreed with this and, consequently, no bonuses for 2012 were awarded to the executive directors and former chief executive," Mr. Hood said in the report.
Mr. Chapman received a base salary in 2012 of 1.23 million pounds ($1.86 million), an increase of 3.4% on the previous year, the report said.
Mr. Chapman's total remuneration for 2012, including pension and vested shares, was GBP5.9 million, compared with GBP7.9 million in 2011, which included a bonus of GBP1.65 million.
Chris Finlayson, previously the head of BG Group's exploration strategy and technology unit, succeeded Mr. Chapman as chief executive Jan. 1, 2013. Mr. Chapman, who had helmed the company for 12 years, stepped down from the board with effect Dec. 31, 2012, but will continue to work and support the transition to the new chief executive until his retirement in June 2013.
Mr. Finlayson's base salary for 2013 is GBP975,000.
Copyright (c) 2012 Dow Jones & Company, Inc.
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