BG Group revises Chief Executive remuneration package
Following extensive shareholder consultation, the BG Group Board and Helge Lund wish to respond to BG Group shareholder concerns. The Company today announces revisions to the remuneration package for its new Chief Executive, Mr Lund.
The revised package brings all elements of Mr Lund’s remuneration within the Company’s remuneration policy approved by shareholders in May 2014. This removes the need for shareholder approval for the conditional award of shares previously proposed for Mr Lund.
The conditional share award will no longer be made. Instead, Mr Lund will be granted an initial award of shares under the Company’s Long Term Incentive Plan (LTIP), with a face value equal to £10.6 million, which will be subject to Company performance conditions.
These conditions are expected to comprise a combination of relative Total Shareholder Return, cash flow and capital efficiency measures. Any changes made to the structure of the LTIP will remain within the Company’s remuneration policy and the Company will consult further with shareholders before they are finalised.
This revised package reduces the expected value of Mr Lund’s initial share award from approximately £10 million to approximately £4.7 million.
After an extensive global search, the company announced the appointment of Mr Lund as Chief Executive and Executive Director of BG Group on 15 October 2014, with a start date of 2 March 2015. The Board believes that Mr Lund is an exceptional candidate, with the necessary skills and experience to lead BG Group and it is clear from the extensive consultation with shareholders over the past few weeks that this view is widely shared.
However, a significant number of shareholders questioned the structure of the package, in particular whether it was appropriate to go outside the remuneration policy approved by shareholders earlier this year.
Both the Board and Mr Lund recognise and wish to respond to shareholder concerns. The Board welcomes the active and constructive role played by Mr Lund in revising the remuneration package so that all elements fall entirely within the Company’s current policy. The initial LTIP award will be made after Mr Lund starts work at BG Group, and will be in addition to an annual LTIP award. Mr Lund has indicated that he still intends to hold any shares that vest to him (net of tax) for the duration of his employment with the Company.
The changes mean that 62% of Mr Lund’s remuneration package in the first year, on an expected value basis, will now be subject to quantitative Company performance criteria.
As a result of these changes, at the General Meeting convened for 15 December 2014, the Company intends to withdraw the previously proposed ordinary resolution to approve the conditional share award. Consequently, Mr Lund has waived his right not to join the Company.