'Prompt-pay' salvo in British Gas wars

BY WILLIAM GLEESON

Richard Giordano, British Gas's embattled chairman, will attempt to defuse public criticism at a packed annual meeting on Wednesday by announcing a "prompt-pay" scheme to reduce the gas bills of customers who pay within 10 days of receiving their bills.

The company confirmed yesterday that it was planning to go ahead with the scheme after learning that one of its most ferocious critics, Alex Salmond, leader of the Scottish National Party, intended to steal its thunder at a press conference today.

Mr Salmond, who has been given 750,000 proxy votes by 2,000 shareholders, said: "The company intended to announce its plans for its 'prompt-pay' scheme at the annual general meeting to deflect criticism over the way the company has cheated customers and employees. But I will be stepping in to stop them by making the announcement myself."

British Gas says that mention of the new scheme is to be made in the address that MrGiordano will make to shareholders. However, the company is not planning to reveal details of the plan until later in the year. Those who pay by direct debit already get a discount. The new arrangement will be available to all customers except those who pay by meter or pre- payment cards.

Shareholders at the AGM will be voting on a resolution proposed by Pensions Investment Research Consultants (PIRC), which calls on British Gas to revise its controversial pay policy in the light of best practice. Under the new system, Cedric Brown, the company's chief executive, gets a 75 per cent pay rise to take his basic pay up to pounds 475,000.

PIRC claims they have the support of seven City institutions as well as many small shareholders. However, a survey of leading fund management companies made by the BBC's The Money Programme shows that most are planning to support the board. Seventeen out of 26 leading institutional investors contacted said they would back the board. Only one said it would vote for the resolution. Others said they would abstain.

In a separate development, Mr Salmond yesterday revealed that he has received written guarantees from British Gas that it will not charge two groups of shareholders for the printing and posting costs incurred in circulating shareholders' resolutions in advance of the AGM. With 1.8 million shareholders, the costs could run into hundreds of thousands of pounds.

In addition to the key resolution from PIRC, there is one from Professor Joseph Lamb, a retired university lecturer, who has been given 500,000 proxy votes. He is calling for a new advisory body to be set up to monitor the standards of corporate behaviour at the company. He also wants boardroom pay rises linked to those made to all British Gas employees.

The written guarantee was extracted from the company after Mr Salmond had been told by Professor Lamb that the company was threatening him with a possible bill for costs on the eve of the deadline for submitting resolutions.

Mr Salmond then went to see the company's Secretary, John Jackson, and warned him that unless he gave a written undertaking not to charge the shareholders he would raise the issue in the House of Commons.

Wednesday's meeting promises to be one of the most eventful and best attended in British corporate history. Some 7,000 shareholders have notified the company that they will be attending the AGM at the London Arena.