Boss of British Gas owner handed £4m pay rise after admitting he ‘can’t justify’ wages

The boss of British Gas has seen his pay nearly double to £8.2m just two months after he said his salary was “impossible to justify”. 

Chris O’Shea, who is chief executive of British Gas owner Centrica, was previously paid £4.5m in 2022.

When asked about his pay packet during a BBC interview in January, Mr O’Shea admitted that “you can’t justify a salary of that size” given the difficulties some customers face when paying their energy bills. 

However, this has not stopped him from accepting bonus payments of £7.3m in 2023, as his total pay ballooned to £8.2m.

The company’s annual report said the surge in pay stemmed from Centrica’s “continued improvements in underlying performance and substantial share price growth”.

In 2023, British Gas profits surged tenfold to £751m compared with £75m a year earlier, while shares in the business have risen by more than 22pc in the last 12 months. 

The bonuses have been paid despite the prepayment meter scandal in February 2023 that exposed how British Gas debt collectors broke into the homes of vulnerable people to force-fit meters. 

The revelations led to a temporary sector-wide ban on prepayment meter fittings, with British Gas still unable to resume under stricter rules.

Carol Arrowsmith, chair of Centrica’s remuneration committee, said she had docked 10pc of Mr O’Shea’s bonus because of the controversy. 

She said: “The committee considered the impact of a national newspaper undercover investigation in February 2023 into the fitting of prepayment meters under court warrant by a third-party contractor working for British Gas. 

“The group chief executive was deeply concerned when he observed a lack of empathy and respect in some of these cases; he apologised unreservedly and immediately commissioned an investigation into the issue, overseen by external compliance consultants. We ceased all warrant activity with the third-party contractor immediately.”

Overall, Centrica made a profit of £2.8bn after tax in 2023, down from £3.3bn in 2022. This led to the company paying £1.1bn in corporation tax and windfall levies.

Besides British Gas, Centrica also owns Bord Gáis, which supplies gas in Ireland, and British Gas Services and Solutions – which offers insurance and service deals on boilers.

Centrica also owns Spirit Energy, which produces gas from fields in Morecambe Bay, while Centrica Energy Storage operates the Rough storage facility in the North Sea. 

The latest annual report also contained comments from Mr O’Shea criticising energy regulator Ofgem, as he called for the abolition of the standing charge on household bills, and demanded tougher rules for the amounts of cash held by suppliers.

He said: “For consumers, we believe that the standing charge for gas and electricity where people pay a fixed fee to cover things like network costs (roughly £300 each year) should be eliminated. 

“Those costs should be recovered through the unit rate for gas and electricity so that those who consume less pay less and those who consume more pay more.”

As for companies’ cash balances, he added: “For energy companies, we believe that they should be made to hold sufficient capital to ensure that if more companies go bust, their shareholders pick up the costs rather than the unacceptable situation in recent years where the costs were picked up by consumers.

“As of now, a number of energy companies effectively have a free bet, using customer deposits to fund their businesses. If their bet comes good, their owners get all of the rewards; and if it doesn’t, consumers bear all of the cost. This cannot be right.”

Ofgem has said both issues are under review.