Centrica - AGM 13 May 2019
Item 2: Approve the Remuneration Report
The structure is unacceptable, though it is sufficiently aligned with long-term performance. The maximum STI exceeds guidelines. Both the STI and LTI are overly dependent on qualitative criteria. The quantum for the year was not excessive, but variable remuneration exceeded guidelines.
The Company has also issued a profit warning for 2019, providing that it expects the energy regulatorns tariff price cap to result in some negative near-term impact on earnings and cash flow in UK Home, particularly in 2019, before it has fully realised its planned cost efficiencies. Trade union dissent has been noted regarding the pay rise of the Chief Executive whilst jobs are being cut. The CEO's salary increased 0.43% in 2018 and will increase 1.9% in 2019.
We recommend that shareholders oppose this resolution.
Item 23: Approve the new Articles of Association
The amendments related to the payment of dividends "provide the Company with flexibility to decide: which distribution channel to use; which distribution channel is to be the default; and whether shareholders may make an election for a distribution channel other than the default."
As the amendments to the Articles include the possibility that the Board, rather than shareholders, would select how dividend payments are made, we recommend shareholders oppose.
Centrica is an energy and services company. Co.'s segment are: Energy Supply and Services, which supplies gas and electricity in the U.K. and North America; Connected Home, which supplies energy solutions and technologies to residential customers; Distributed Energy and Power, which supplies energy solutions, generation and technologies to commercial and industrial customers; Energy Marketing and Trading, which trades and optimizes energy; Exploration and Production, which produces and processes gas and oil and develops new fields; Central Power Generation, which generates power from combined cycle gas turbines, wind and nuclear assets; and Centrica Storage, gas storage in the U.K.
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