14th Apr 2015 10:55
LONDON (Alliance News) - Centrica PLC Tuesday appointed insurance industry veteran Mark Hodges as the new managing director of its gas and electricity supply arm British Gas, a move that puts him firmly in the spotlight amid intense pressure and scrutiny on the UK's energy suppliers.
Hodges appointment represents the end of an 11-month search for a new British Gas chief executive since the departure of Chris Weston, who announced he was leaving to join Aggreko PLC last May.
Hodges is an insurance industry veteran, having worked for more than 20 years at Norwich Union and Aviva PLC, which he quit in 2011 to run specialist insurance broker Towergate Partnership. He quit that firm last October. His last role at Aviva was head of the company's UK operations, and his departure for Towergate came as a surprise as he'd been touted as a potential successor as group chief executive.
Centrica defended its choice of going outside the industry for a new head of its British Gas arm.
"Mark brings a strong understanding of the UK consumer market and a track record in improving business performance. He is experienced in working in a regulated environment, driving significant improvements in customer service and efficiency, offer innovation, major IT and change projects," it said in a statement.
Hodges will officially take up his role at British Gas on June 1 and join the Centrica board. He has been awarded a remuneration package consisting of a basic salary of GBP625,000 per year alongside a number of variable incentive arrangements.
Hodges receives a considerable rise in basic salary compared with Weston, who was paid a basic salary of only GBP553,000 in 2013, which had increased from GBP510,000 in 2012, according to Centrica's annual report.
Centrica said it is currently discussing a new "simpler" incentive arrangement for all of its executive directors which will lower the maximum bonus directors can get compared with the existing policy, and said Hodges will participate in the revised plans if approved at the annual general meeting due to be held on April 27.
Subject to shareholder approval, Centrica will double Hodge's salary if he meets all his targets via an annual bonus, and said it will treble his annual salary if his performance is "materially in excess of target".
In addition, Centrica has offered Hodges a long-term incentive award of up to three times his annual salary based on a mix of financial and non-financial measures over three years, with any shares due released after five years.
Centrica said 50% of any annual bonus paid to Hodges will be deferred into shares for three to four years, and Hodges is required to build up and maintain shares in Centrica worth at least double his annual salary, which initially would need to total GBP1.25 million.
Ian Peters, who has been heading British Gas on an interim basis, will remain with Centrica and become head of customer facing strategy. He will continue to be on the Centrica Executive Committee until the end of 2015, supporting the company?s strategic review and its contribution to the Competition and Markets Authority energy market investigation.
That's a key job, as Centrica and its five major peers in the UK gas and electricity supply market face a deep regulatory review into the sector. The companies have faced calls for a breakup of energy supply and distribution arms, and are under intense political pressure ahead of May's UK General Election, with the opposition Labour party pledging a range of measures to ensure that the prices consumers are charged for their energy are capped and lowered.
Centrica shares fell by 0.2% to 261.60 pence per share on Tuesday morning.
By Steve McGrath; [email protected]; @stevemcgrath1. Updated by Joshua Warner; [email protected]; @JoshAlliance
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