29 July 2014
Centrica plc appoints Iain Conn as Chief Executive
Centrica plc is pleased to announce the appointment of Iain Conn as Chief Executive with effect from 1 January 2015, at which point he will join the Centrica plc Board. Iain will succeed Sam Laidlaw who will retire from the Board on 31 December 2014.
Iain will join from BP plc where he has been Chief Executive, Downstream, BP’s refining and marketing division, for the past seven years. In this role he is responsible for running BP's customer-facing activities in the fuels, lubricants and petrochemicals sectors. This involves all manufacturing, supply, optimisation and marketing activities in support of both business and retail customers and includes shaping one of the world’s leading retail businesses, with 18,000 service stations in 70 countries, serving an estimated 12 million customers every day.
Iain has been a Board member of BP since 2004 and has previously held a number of senior roles throughout the business including in trading, exploration and production, and management of corporate functions such as safety and human resources.
Rick Haythornthwaite, Chairman of Centrica said:
“Sam has shown exceptional leadership over the past eight years. Under his stewardship Centrica has achieved strength and scale which is of great benefit to the UK as we secure the future energy needs of our customers in an increasingly international gas market. I would like to thank Sam on behalf of the Board, shareholders, customers and our people for his enormous commitment and contribution to Centrica.”
“Iain will bring an impressive combination of experience to our business. He heads a global consumer brand familiar to millions of people and he also possesses a deep understanding of the energy sector built up over a lifetime in the industry. His breadth of knowledge and commitment to customers and safety make him ideally suited to lead Centrica in the next phase of its development.”
Sam Laidlaw, Chief Executive of Centrica said:
“It has been a privilege to lead Centrica at a time of huge change in global energy markets, with all the challenges we face in terms of affordability, security of supply and the need to reduce carbon emissions. My aim has always been to help create a leading integrated energy company capable of meeting those demands while keeping customers and the communities we serve at the heart of what we do. Much remains to be done in the rest of the year but I am enormously appreciative of the unstinting work and support of my 37,000 colleagues who all contribute to Centrica's success.”
Iain Conn, Chief Executive Designate of Centrica said:
“I am excited to be joining Centrica, a company which is leading the way in the provision of secure and reliable energy and services to customers in the UK and North America. Centrica also has a major responsibility for long-term energy supplies, particularly for the UK. I recognise the challenges which we face in rebuilding customer trust in the sector and helping to create an effective and sustainable approach to energy markets. I look forward to playing my part, along with all of Centrica's people, in striving to achieve these goals."
Upon appointment, Iain will also become Chairman of the Executive and Disclosure Committees and a member of the Corporate Responsibility Committee.
In accordance with obligations under Listing Rule 9.6.13R, Iain holds or has held the following directorships of a publicly quoted company in the previous five years:
- BP plc
- BT Group plc
- Rolls-Royce Holdings plc
There is no other information required to be disclosed under Listing Rule 9.6.13R. Iain has an interest in 812 ordinary shares of Centrica plc.
- Sam is retiring from Centrica on 31 December 2014. There will be no payment made in lieu of notice.
- Sam’s other remuneration arrangements will follow the Remuneration Policy set out in the Group’s 2013 Annual Report and Accounts and approved by shareholders at the 2014 AGM.
- Accordingly, existing long term incentive awards will be time apportioned for the period worked. Therefore, 40% of the awards made in 2013 and 75% of the awards made in 2014 will lapse on retirement. The balance will remain subject to the normal performance conditions and any vesting will be determined at the end of the performance measurement period.
Iain’s remuneration package will consist of a basic salary and variable incentive arrangements which are in line with Centrica’s current remuneration policy and practice (www.centrica.com/annualreport13 pp 65-82).
A new, simpler incentive arrangement for all executive directors is currently being discussed with shareholders in advance of seeking approval at the 2015 AGM. It will have a lower maximum potential than the current approved policy. It is intended that Iain will participate in the new arrangements once approved.
The key elements of Iain’s remuneration package are as follows:
- Base salary of £925,000
To provide continuity of incentive opportunity prior to new
arrangements being established two transitional awards will be made:
- A share incentive award equal to 1 times base salary, subject to performance conditions and vesting in April 2016.
- A share incentive award equal to 2 times base salary, subject to performance conditions, vesting in April 2017 and released in April 2018.
- Pension and other benefits in accordance with the Remuneration Policy set out in the Group’s 2013 Annual Report and Accounts and approved by shareholders at the 2014 AGM.
Under Sam’s leadership since July 2006, Centrica has been transformed into a leading integrated energy company, with customers at its core. During Sam’s tenure as CEO, despite the financial downturn, Centrica has invested £1.70 for every £1 of profit earned, organically and through acquisition. The Group is better balanced and more resilient as a result, with strong businesses in the UK and North America in the downstream, midstream and upstream segments.
Over this period, investors have seen a total shareholder return of over 175%. Centrica has grown in scale: from 2005 (the last full year before Sam’s appointment) to 2013, EPS rose from 16.2p to 26.6p, operating profit grew from £1.5bn to £2.7bn, and Group revenue increased from £13bn to £27bn.
Under Sam’s leadership, Centrica has:
- secured energy for customers: Centrica now has around £60bn of long term energy supply commitments to secure energy for its customers
- forged strong relationships with world-class global energy partners: for example, 2013 partnership with Qatar Petroleum International in Canada, 2011 £13bn gas supply deal and strategic partnership with Statoil
- developed a more scaled and balanced upstream business: oil and gas production spanning the Atlantic basin, with significant positions in Norway and Western Canada and new skills to extract production in the UK through the acquisition of Venture (international gas and oil reserves more than doubled, 65% now outside the UK)
- invested and innovated in customer systems and service: leading position in smart connected homes (e.g. pioneering Hive Active Heating, 1.3 million smart meters installed in UK)
- established a scale downstream business in North America: over 5 million residential and business customers, providing a platform for further growth in energy supply and services
- expanded the midstream and LNG business: recognising today’s increasingly international energy market (e.g. secured a landmark 20 year US gas export deal in 2013)
Iain Conn joins from BP plc where he has been Chief Executive, Downstream since June 2007. Iain joined BP Oil International in 1986, working in a variety of roles in oil trading, commercial refining and exploration before becoming, on the merger between BP and Amoco in 1999, Vice President of BP Amoco Exploration’s mid-continent business unit.
At the end of 2000, he returned to London as Group Vice President and a member of the refining and marketing segment’s executive committee, taking over responsibility in 2001 for BP’s marketing operations in Europe. In 2002 he was appointed Chief Executive of BP Petrochemicals. Following his appointment to the Board in 2004, he served for three years as Group Executive Officer, Strategic Resources, with responsibility for a number of group functions and regions.
He is a Non-Executive Director of BT Group plc and also served as a Non-Executive Director and Senior Independent Director of Rolls-Royce Holdings plc from January 2005 until May 2014. He is also Chairman of the Advisory Board of Imperial College Business School and a member of the Council of Imperial College.
Centrica Investor Relations
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+44 (0) 800 107 7014
An interview with Rick Haythornthwaite, Chairman is available on www.centrica.com.