THE pace of change in the energy industry amid plunging oil prices was spotlighted yesterday as British explorer BG Group announced its new chief executive had started work a month ahead of schedule.
Helge Lund has arrived at BG after the company last week took a multi-billion-pound hit from the nosedive of the oil price. It evaded a shareholder revolt late last year about the new boss’s £15 million “golden hello” package.
Lund, who joins after a decade at the helm of Norwegian energy giant Statoil, had been expected to take up the BG role on 2 March.
But BG said in a stock exchange statement yesterday that the date had been brought forward to 9 March “following agreement last week from his former employer to release him from his contractual commitments”.
Chris Finlayson, BG’s previous boss, quit last April just 18 months into the job after overseeing a succession of profit warnings. Andrew Gould, who has served as interim executive chairman since then, has returned to his role as non-executive chairman, the company said yesterday.
The group triggered investor uproar last October when it announced the payment to Lund upon his agreeing to take on the role of chief executive.
The Institute of Directors branded the pay package “excessive, inflammatory and contrary to the principles of good corporate governance”.
BG sidestepped an embarrassing investor rebellion by changing the terms of the package, meaning there would be no need for a planned investor vote. However, Lund will still be in line for a “golden hello” of up to £14m – assuming maximum performance of a long-term bonus share award – plus an annual package of up to £14m.
Last week, the group took an $8.9 billion (£5.9bn) provision, largely due to the crude oil price having more than halved from the $116 a barrel it was trading at last summer. It led to the company posting a $5.03bn (£3.35bn) fourth quarter loss.
BG also revealed that as a result it would slash capital spending by between $6bn and $7bn in 2015, following on from similar major capital expenditure cuts at industry giants including Shell, BP, Exxon, Chevron, ConocoPhillips and Total.
BG was created in 1997 when British Gas – which was privatised in 1986 – demerged into two separately-listed companies. Centrica, owner of Scottish Gas, took responsibility for the retail side of the business, while BG took the exploration business.