Centrica CEO Awarded £3.7m Bonus Amidst Controversy: Record Profits, Taxation, and Customer Outrage

Record Profits Prompt Bonus Award

Despite criticism from customers and regulators, Chris O’Shea, the CEO of Centrica, will receive a bonus of £3.7m in addition to his £790,000 salary. This comes after the company posted record profits of £3.3bn in 2022, mainly due to the surging oil and gas prices following the Russian invasion of Ukraine.

Controversy Surrounding Bonus Award

Centrica has been under fire lately after its debt agents broke into the homes of vulnerable people to install prepayment meters, causing public outrage. As a result, the regulator Ofgem has called for all energy suppliers to suspend the use of prepayment meters. Given the current climate of rising energy prices and concerns about customer debt, the decision to award a large bonus to the CEO has raised eyebrows and sparked controversy.

Board Members Stand by the Decision

Despite the backlash, the company has defended its decision to award the bonus, citing the need to attract and retain talented executives. Board member Carol Arrowsmith said that the company’s senior executives are hired on performance-related contracts, and that bonuses are a significant proportion of their pay. However, critics argue that such bonuses are inappropriate at a time when customers are struggling to pay their energy bills.

Taxation and Energy Profits Levy

Centrica paid £1bn in tax on its profits in 2022, including £54m in windfall tax – the Energy Profits Levy – which was introduced by the UK government to recoup some of the “extraordinary” earnings made by energy firms in recent years. This windfall tax only applies to profits made from extracting UK oil and gas, and companies can reduce the amount of tax paid by factoring in losses or investments. This has led to criticism of companies such as BP and Shell, who have paid little or no UK tax in recent years.

Conclusion

The controversy surrounding the bonus awarded to the CEO of Centrica highlights the complex issues surrounding energy companies and taxation. The need to attract and retain talented executives is understandable, but it should not come at the expense of customers who are already struggling to pay their energy bills. The current climate calls for a balance between executive compensation and customer affordability, and it remains to be seen whether the industry can find that balance.