British Gas owner Centrica’s shareholders say yes to chief executive’s £740,000 pay rise in ‘challenging’ conditions

Shareholders expecting their dividends to be slashed this year clubbed through a 44 per cent pay rise for Centrica’s chief executive today despite company’s disappointing performance.

Conn has overseen a two-thirds drop in share prices, to a 20-year low, since stepping into the role while the British Gas owner is haemorrhaging customers to other suppliers.

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Investors holding more than 85 per cent of Centrica’s shares voted in favour of Conn’s £740,000 pay rise, a number critics have pointed to as very close to the 742,000 customers it lost last year.

In an update to shareholders today the firm said that the number of customers moving away from British Gas had slowed to 234,000 in the first quarter of the year.

In January the government introduced the first cap on the price that energy companies can charge per unit for customers on their default tariffs.

The cap rose around 10 per cent in April, causing Centrica, and the rest of the Big Six suppliers, to hike their prices to within pounds of the annual limit to charge the maximum possible.

Centrica said today that the effect of the price cap, warmer-than-usual weather for the time of year and falling UK natural gas prices had dented its results in the first quarter of the year.

However, the company said a cost programme would still help it reach adjusted operating cash flow targets of £1.8bn to £2bn in the full year of 2019, sending shares up 1.99 per cent to 94.44p.

It expects to reduce its headcount by between 1,500 and 2,000 people over the year to help deliver efficiencies of £250m, and divest £500m in business.

“Good cost control means this update isn’t as bad as it could have been, but with a strategic review now pencilled in, the stage is set for a dividend cut,” said Hargreaves Lansdown analyst George Salmon.

Conn said his company will examine its portfolio over the coming months before releasing a strategic update in July.

Russ Mould, investment director at AJ Bell, said the British giant has “lost its way” and must find a new path to “revive” earnings.

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“British Gas used to be a trusted brand – now its reputation has been tarnished by talk of sub-standard customer service and expensive bills,” he warned.

“The company is no doubt working hard to steady its ship and the market certainly likes the sound of a rough plan to cut costs, improve customer service and maintain financial discipline. We should get the full plan in July.”