Centrica boss admits his £4.5 million salary is unjustifiable

The High Pay Centre called for workers to be included in remuneration committees to prevent unreasonable CEO pay

The boss of British Gas owner Centrica said his pay last year, £4.5 million, is impossible to justify.

Speaking to the BBC, Chris O’Shea said: “You can’t justify a salary of that size. It’s a huge amount of money. I am incredibly fortunate. I don’t set my own pay; that’s set by our remuneration committee.”

The comments come as UK domestic energy customers have fallen nearly £3 billion behind on bills.

On 1 January, the Ofgem price cap for households in England, Wales and Scotland rose by 5% to £1,928 a year for the average annual dual-fuel energy bill.

O'Shea turned down a £1.1 million bonus in 2021 due to "hardships" faced by customers. He also refused bonuses in 2020 and 2019 because of the Covid-19 pandemic. 

His £3.7 million bonus was declared shortly after an investigation by the Times newspaper revealed debt agents working for British Gas had broken into the homes of vulnerable people to force-fit prepayment meters. 

Energy suppliers have been officially banned from force-fitting prepayment meters for elderly people and those with infant children.

Andrew Speke, spokesperson for thinktank the High Pay Centre, called for workers to be included in remuneration committees.

Speaking to HR magazine, he said: "It's rare for a CEO to admit their pay is too high, particularly when many FTSE CEOs are complaining that their pay is too low.

“Nevertheless one would expect someone paid such a huge sum to show greater leadership and responsibility and actively challenge the pay setting process, rather than saying he doesn't deserve it, before shrugging and accepting it anyway.

“This is just one example of an executive pay model across corporate Britain, where how much an executive is paid is rarely aligned with how well their company has served its customers and wider society. Mandating workers on boards would be one step towards ending this culture of rewarding failure."

Read more: FTSE 100 CEOs have already earned more than average yearly salary

A survey by job board Totaljobs found pay was the leading factor causing staff resignations between October and December 2023 (29%).

Its survey of 1,000 HR decision-makers found 33% of businesses plan to increase salaries and bonuses at the start of 2024 in a bid to retain talent.

Nearly three in five (58%) businesses are confident they will recruit the people they need this quarter, but 30% will struggle to meet candidate salary expectations.