British Gas’s parent company, Centrica, is facing a backlash from shareholders after the CEO received a substantial salary increase, while many customers are struggling with significant energy debt. Nearly 40% of shareholders opposed the compensation plan for CEO Chris O’Shea during the company’s annual meeting in Manchester. This dissent arises amid criticism of O’Shea’s pay during the ongoing energy crisis.
Last year, O’Shea’s base salary rose by 29%, amounting to £1.1 million, while the total including bonuses reached £4.3 million. This is about half of what he earned the previous year, when his total compensation peaked at around £8 million.
This situation has heightened tensions with consumer advocates, fuel poverty campaigners, and climate activists, who argue that the company is profiting excessively from soaring energy prices, especially following Russia’s invasion of Ukraine. Meanwhile, many households find it increasingly difficult to afford their heating bills, contributing to energy debt that has ballooned to approximately £3.8 billion since 2022.
Centrica’s market value has surged by over 250% in the past five years, largely due to the pandemic and escalated energy prices linked to geopolitical events. However, shares dipped by 7.5% recently as the company warned about reduced profits from a mild winter.
Before voting, the proxy advisory firm ISS suggested supporting O’Shea’s pay, noting that the increases were significantly higher than what the broader workforce received. They implied that the rationale behind these raises was inadequate.
Greenpeace UK’s climate team leader, Mel Evans, criticized the government for allowing such substantial bonuses to energy companies amid a cost of living crisis. She pointed out that even shareholders are recognizing that the proposed pay hikes are excessive. “We have all been unfairly burdened by the gas industry’s profits at the expense of regular consumers,” Evans lamented.
O’Shea himself acknowledged last year that, given the financial strain on gas customers, he found it hard to justify his salary. “It’s a huge amount of money… I don’t determine my pay; that’s the work of the Remuneration Committee,” he stated.
A Centrica representative commented that, despite the pushback, the majority of shareholders supported the remuneration resolution and expressed a commitment to maintaining open dialogue with shareholders moving forward.
In a separate note, Tesco’s annual report indicated that CEO Ken Murphy’s salary dropped by £923,000 to about £1 million, making him 373 times the average worker’s pay. This reduction came as a result of failing to meet sales and sustainability targets. However, this year, Murphy’s earnings could exceed £10 million if he meets all performance goals, representing a modest base salary increase and a significant potential performance-related bonus.
