Chart: Departing CEO oversaw a 73 per cent drop in Centrica’s share price
Iain Conn marked his departure from British-Gas owner Centrica this morning by slashing the dividend and launching an attack on the government’s energy price cap.
The price cap was brought in at the start of 2019 to save consumers money.
Read more: How long will luck last for Centrica’s 13% dividend yield?
Conn said this morning the price cap had been the “most difficult thing” to deal with in 2019. He added it had pushed profits down £300m.
He urged prime minister Boris Johnson’s new government to adopt a stance which was “more pro-free competitive markets” in regards to the cap.
“All the current price cap has done is actually delayed the issues rather than solve them, and I’m hoping a new fresh look by this new government may make changes.
“It’s always been said that the price cap is going to be temporary and we look forward to the day when it’s rolled back.”
Centrica ‘not well-equipped’ for industry upheaval
However, much of the reaction has taken a longer-term view of how Conn has managed the firm since joining in 2015.
At that point, shares were worth 293p. Since then, they have plummeted 72.7 per cent to around 80p.
The firm has also made thousands of people redundant over the period. In early 2018, it said it would cut 4,000 jobs after a “weak” year. This June, it said it would axe a further 700 management jobs.
Despite this, Conn has received millions of pounds worth of bonuses during his tenure.
Last year, he received a 44 per cent rise in his pay to £2.4m.
Centrica was “not particularly well-equipped” for the changes which have been imposed on the energy industry, Conn said, which he described as “massive”.
British Gas lost 742,000 customers last year.
Centrica must ‘stop rewarding boardroom failure’
CMC Markets analyst Michael Hewson said it was “probably just as well” Conn had announced his departure. If not, he added, “he would probably have been pushed out, given how the share price has performed since he took over”.
“When Mr Conn took over the reins at Centrica the share price was just below 300p, and it’s been pretty much one way traffic since then. In a word the share price performance has been woeful.”
GMB national secretary Justin Bowden said: “British Gas has to stop haemorrhaging customers and rewarding boardroom failure. It has to change the flawed hard sell business model that contributed to the mess that it’s in and reverse its bullying culture and urgently build a strategy around investment and growth, not cuts.
“Blessed with a loyal workforce, a top class brand and the biggest customer base in the country it now needs the right leadership and a properly implemented strategic vision.”
‘A lot of cloud and not much silver lining’
Centrica also slashed its shareholder dividend by 58 per cent from 3.6p in the first half of 2018 to 1.5p this year.
Given Conn’s bumper pay rise last year, shareholder unrest has grown in recent months. Today’s move will bring “a lot of cloud and not much silver lining for Centrica shareholders,” said Hargreaves Lansdown analyst George Salmon.
“Given how the cocktail of challenges had been brewing over the last couple of years, the cut isn’t a surprise in itself, but a near 60% reduction is harsher than had been feared.”
Read more: Centrica’s shareholders say yes to chief executive’s £740,000 pay rise
Conn said this morning that although his bonuses had been in line with performance, he understood executive pay is “a very big, emotive topic”.
Appearing to refer to shareholder disquiet over his salary, he added: “I get it, completely”.