BG Group has responded to the numerous reports and opinions that have surrounded its proposed remuneration package to the new CEO, Helge Lund. Less than 24 hours after our blog post which summarised the concerns, BG Group’s announcement, dated 1 December 2014, sets out revisions to the remuneration package and is stated to follow “extensive shareholder consultation”.

In short, the upfront conditional share award will no longer be made. As a result, the revised package brings all elements of Mr Lund’s proposed remuneration within BG Group’s previously approved remuneration policy, and therefore the need for shareholder approval for the conditional award of shares has disappeared (ditto the ordinary resolution that was to be proposed at the 15 December General Meeting). According to BG Group, a significant number of shareholders questioned the structure of the package, in particular whether it was appropriate to go outside the remuneration policy approved by shareholders earlier this year – it seems those shareholders’ concerns have been eased.

As the conditional share award will no longer be made, Mr Lund will instead be granted an initial award of shares under BG Group’s LTIP, with a face value equal to £10.6 million. That award will be subject to corporate performance conditions, which are expected to comprise a combination of relative Total Shareholder Return, cash flow and capital efficiency measures. BG Group has confirmed that any changes made to the structure of the LTIP will remain within the shareholder approved remuneration policy and that it will consult further with shareholders before any such changes are finalised.

According to BG Group, as a result of the changes to the revised package, the expectedvalue of Mr Lund’s initial share award will reduce from approximately £10 million to approximately £4.7 million.

Whether there will be further ramifications for BG Group remains to be seen. The initial reaction seems positive, however, with the Institute of Directors stating that the IoD applauds the revisions to Mr Lund’s proposed remuneration whilst noting that “Mr Lund’s pay now conforms with the policy guidelines agreed by shareholders in May and is subject to quantifiable performance targets”