The boss of Centrica said he spent every pound he had received in bonuses on buying shares in the company, as he was forced to defend his pay after a warning about the impact of a new cap on household energy bills.
Iain Conn and the rest of Centrica’s board came under fire at its annual meeting in London over the group’s performance and executive remuneration. Nearly 15 per cent of votes were cast against its remuneration report.
One retail shareholder calculated that Mr Conn’s bonus equated to almost £1 for every customer the owner of British Gas lost in the UK last year.
Mr Conn, who joined Centrica in 2015 from BP, received a £776,000 cash and shares bonus in 2018 as part of total remuneration up 44 per cent to £2.42m, drawing ire from unions and campaigners against excessive boardroom pay. Centrica lost 742,000 domestic energy supply customers in the UK last year as households were lured away by newer entrants to the market offering cheaper deals.
“I have taken no net cash out of this company. I have put it all back in in terms of my bonuses,” Mr Conn said after the annual meeting.
Centrica warned in a trading update earlier on Monday that a new cap on household energy bills in Britain, plus other factors such as warmer than average weather, would hit its financial performance in the first half of the year and had “also put some further pressure on the outlook for the full year”.
The trading environment had been “challenging” in the opening months of 2019, Centrica said, as it grappled with a number of difficulties, which also included outages at two nuclear power plants in Britain, in which it owns minority stakes. It also cited falling UK natural gas prices, which have affected its oil and gas production joint venture, Spirit Energy.
The company lost a further 234,000 customer accounts in the UK in the first four months of the year as it felt the effects of the cap on energy bills, which came in to force in January, as well as continued competition. The level of the cap was raised in April, encouraging some customers to switch to fixed-price deals or to companies offering cheaper tariffs.
However, Centrica’s shares were up 3 per cent at 95.5p by late afternoon on Monday, as there was some relief it had maintained its full-year targets for 2019.
Mr Conn, whose tenure at the company has been marred by thousands of job cuts, credit rating downgrades, dividend cuts and profit warnings, has promised a strategic update alongside interim results at the end of July. By this time, Centrica would have “additional clarity” on issues such as how the energy price cap was likely to affect the market longer term, as well as the commodity price environment, Mr Conn said.
The strategic update would also include “reflections” on Centrica’s “current business portfolio”.
Centrica has been trying to sell its 20 per cent stake in UK nuclear power plants majority owned by EDF of France. Mr Conn also hinted he was examining the future of Spirit Energy, which he had previously indicated could eventually be floated on the stock market.
Since joining Centrica, Mr Conn has shifted the energy group to focus on customer-facing services but analysts are yet to be convinced that new areas such as its Hive products — which range from smart thermostats that can be controlled via an app to security cameras — can replace income lost from its core electricity and gas supply business.
Centrica’s shares fell to a two-decade low following its full-year results in February after the company triggered concerns that investors may be in line for another dividend cut.