Centrica, the owner of British Gas, is facing renewed scrutiny over executive pay after approving a pay package for Chief Executive Chris O’Shea worth £4.7 million, despite a recent slump in profits and ongoing shareholder dissent. The decision comes less than a year after nearly 40% of Centrica’s shareholders voted against the board’s remuneration plans at the company’s annual investor meeting.
O’Shea’s 2025 compensation includes a base salary increase from £855,000 to £1.1 million, a £1.4 million bonus – half of which will be paid in shares vesting over three years – and £2.2 million from the company’s long-term investment plan. This follows a 2023 pay packet of approximately £8 million, which drew criticism as many UK households struggled with fuel poverty during the energy crisis.
The latest remuneration report acknowledged “mixed shareholder feedback” regarding last year’s pay increase, stating the company would “continue to engage regularly” with investors on executive compensation. Centrica believes it has established a framework that “reflects stakeholder expectations and rewards the long-term success of the group.”
The pay decision coincides with a reported fall in Centrica’s profits. Adjusted profits fell to £309 million for the year, down from £364 million the previous year. This decline was attributed to warmer weather reducing energy demand and a rise in customers opting for cheaper, fixed-price energy deals. British Gas reported lower profits for despite a modest 1% growth in its customer base to almost 8 million accounts.
Approximately one-third of British Gas customers are now on fixed-rate deals, up from a quarter at the end of , further impacting revenues. The company’s wider retail profits remained flat at £557 million, boosted by earnings from energy services and business solutions.
Centrica’s financial performance was also impacted by factors beyond consumer behavior. The company reported adjusted earnings of £1.42 billion for , a significant decrease from £2.3 billion the year before. Geopolitical volatility on global energy markets and outages in the UK’s nuclear reactor fleet contributed to the decline.
The company has paused its share buyback program, leading to a more than 5% drop in its share price. Centrica stated that suspending the buyback will allow it to prioritize investment in areas that could deliver more predictable returns.
Centrica is making substantial investments in long-term energy projects, including the new Sizewell C nuclear plant in Suffolk and the development of advanced modular reactors (AMRs) alongside X-Energy. The company also acquired Europe’s largest gas import terminal at Grain LNG for £1.5 billion and continues to invest in its gas storage facility at Rough.
These investments represent a strategic bet on Europe’s growing appetite for low-carbon electricity, driven by the expansion of AI datacenters and the need for secure gas import alternatives following Russia’s invasion of Ukraine. O’Shea stated the company’s strategy is to “support the energy transition while making stable and predictable returns.”
The future of the Rough gas storage site remains a point of discussion between Centrica and the UK government. Centrica reopened the facility in late during the European energy crisis, but its profitability has been challenged as European gas market prices have cooled. O’Shea indicated the company may be forced to shut the site unless it receives financial support from the government.
“2025 is a turning point and in 2026 we will build on this momentum,” O’Shea said, signaling a focus on stable and predictable returns as the company navigates a changing energy landscape.
