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Helge Lund, according to one fan, is a Cristiano Ronaldo of the oil and gas world – a superstar chief executive who earned his fame by invigorating Statoil, Norway’s previously sleepy national energy champion, while dishing out advice to two UN secretary generals on sustainability matters.
BG Group, without a permanent chief executive for six months, would never be able to land Lund, it was assumed. It is the smaller company and Lund seemed settled in Norway. Writing a large cheque has solved the problem. Lund will arrive next March with a Ronaldo-like pay package: a £12m ‘golden hello’, a £3m buy-out of his Statoil shares plus the chance to earn £13.5m a year at BG.
Naturally, Lund says there are factors beyond money at work – fresh challenges, the need for Statoil to have a new leader, etc etc. And, as you would also expect, BG prefers to focus on a figure of £9m-a-year, which it thinks more accurately reflects the net present value of awards that rely on performance hurdles being met.
However you cut it, though, this is a mighty award, even for a FTSE 100 company worth £43bn. Even on the £9m figure, Lund will still be earning about seven times as much as he did in Norway. BG needs to call a special meeting of shareholders to get approval for the £12m golden hello.
Its pitch at the meeting will be nothing more elevated than “trust us”. Lund will collect that £12m, in the form of BG shares, if he meets “personal performance criteria” but these will not be published because the judgment of the remuneration committee at the time is all that counts. All eyes, then, will be on the chair of BG’s pay committee, Sir John Hood, who also serves at WPP – not a company known for its restraint pay.
Despite that glaring shortcoming, expect City fund managers to laud the hiring of Lund and hold their noses on his pay. The unspoken message from BG’s boardroom is very simple: look, last year we promoted Chris Finlayson to be chief executive and he lasted only 15 months; we’ve got a $20bn LNG plant opening in Australia and we can’t afford any more production screw-ups; we’re desperate.
