Oil bosses get paid how much?

Hal Austin

Just when you thought UK plc was realising its wider social responsibility, along comes the Shell/BG merger to remind us that the more things change, the more they remain the same.

For example, in the 1970s, the chief executive of our leading companies earned about 20 times the average pay in their organisations.

In 2015, the pay differential is now 400 times, that is, according to this logic, the productivity of the average chief executive is 400 times that of hardworking employees who get out of bed early in the morning to travel in to work where they remain often until well past the normal end of their working day.

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The same chief executive adds 400 times per capital in value to the firm than the average employee.

These remuneration packages are negotiated by the chairman of the appropriate committees, themselves semi-retired senior executives, backed by some of the best legal brains in the country on the company’s side.

It takes us back to the 2007/8 global financial crisis which impacted on every single developed economy (including Canada, although they like to claim to be exceptions) and involved corporates with chief executives and finance directors with great credentials, including MBAs from some of the world’s leading business schools.

One such super MBA was Andy Hornby, who came top of his MBA class at Harvard University, the leading higher education institution in the world.

Helge Lund, who took over the reins of BG in February, has taken the biscuit for the most generous remuneration in two months – which has been estimated at £28m.

I am sure he is a star performer and knows the oil industry inside out, but the boss of the new company is still letting him go; in other words, he has little regard for the value he can add or his superman productivity rate.

What is also interesting that that a remuneration committee, comprised of some experienced business people, and lawyers who could negotiate the hide off a donkey, could not include a clause in this agreement to restrict Mr Lund’s package in the liability of a merger.