Centrica, the owner of British Gas, has announced that its CEO, Chris O’Shea, will receive bonuses totalling £3.7 million after the company achieved record profits in 2022.
O’Shea, who declined bonuses for the previous three years, will also receive a salary of £790,000. However, this news comes amidst widespread financial struggles for many people who are finding it difficult to pay their energy bills.
Additionally, there have been reports of debt collectors breaking into vulnerable people’s homes to install prepayment meters for the company.
Centrica defended O’Shea’s bonus, stating that he had created value for shareholders and successfully navigated regulatory and political issues. The company’s profits rose to £3.3 billion in 2022 due to a surge in oil and gas prices following Russia’s invasion of Ukraine.
The boss of #BritishGas owner @centricaplc will receive bonuses worth £3.7m after the firm posted record profits in 2022. It comes as millions struggle to pay energy bills and after debt agents for the firm broke into vulnerable people's homes to fit prepayment meters. pic.twitter.com/HE9yAMR4xU
— Share_Talk ™ (@Share_Talk) March 22, 2023
The publication of these figures in February led to demands for energy companies to pay more taxes. O’Shea had previously claimed it was “too early to have a conversation” about potential bonuses, but Centrica’s annual report, released on Wednesday, argued that bonuses were necessary to attract and retain top talent.
According to Carol Arrowsmith, a board member, the employment contracts of senior executives at the company include a significant portion of pay that is tied to their performance, as is common for most public companies. In 2021, Chris O’Shea declined a £1.1 million bonus due to the challenges faced by customers, and he also refused bonuses in 2020 and 2019 due to the pandemic.
British Gas has faced criticism in recent months after an investigation by The Times newspaper exposed that debt collectors working for the company had unlawfully entered the homes of vulnerable people to install prepayment meters, resulting in more similar incidents being reported. As a result, Ofgem, the energy regulator, has asked all suppliers to suspend forced prepayment meter installations, and courts in England and Wales have stopped firms from making applications to install them. Centrica has expressed disappointment with the allegations against one of its contractors, Avarto Financial Solutions, and is conducting its own investigation.
Centrica’s record-breaking profits in 2022 were mainly generated by its nuclear and oil and gas business, rather than its British Gas retail division. Because of competition regulations, Centrica is not permitted to offer its own gas at a discounted price to customers of British Gas.
Centrica paid £1 billion in taxes on its profits, of which £54 million was attributed to the Energy Profits Levy, also known as the windfall tax, introduced by the government in 2022. The purpose of the tax is to recover some of the “exceptional” profits that energy firms have made recently and help reduce energy costs for households.
The windfall tax only applies to profits from the extraction of UK oil and gas and is currently set at a rate of 35%. However, energy companies are required to pay an additional 30% in corporation tax and an extra 10% rate, bringing the total to 75%. Nonetheless, companies can lower their tax payments by accounting for losses or investments. Consequently, in recent years, large corporations like BP and Shell have paid minimal or no UK taxes.
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