By Daniel Hunter

Plans to pay the new boss of gas firm BG Group £25 million have been heavily criticised by the Institute of Directors (IoD).

The pay package still requires shareholder approval, but the IoD said that it will damage the reputation of UK business if approved.

The IoD said Helge Lund, who takes over BG's new chief executive in March, was already being paid a "competitive market package".

Mr Lund will be given £12m in what the IoD describes as "golden hello shares" and could earn up to £13.5m a year if performance targets are met.

Simon Walker, the IoD's director general, said: "The Institute of Directors is always reluctant to criticise an individual company. However, we do have a responsibility to criticise an action that brings the whole of British business into disrepute and threatens already fragile attitudes to corporate Britain.

"For that reason we state explicitly our strong opposition to BG Group's recommended £25m pay deal for its incoming chief executive. It is excessive, inflammatory and contrary to the principles of good corporate governance."

Mr Walker explained that the package was particularly excessive considering BG Group's size compared with the likes of BP and Royal Dutch Shell which pay their chief executives smaller packages.

He added: "This pay deal would do serious damage to the reputation of British business six months ahead of a general election and at a time when the reputation of UK plc is still suffering."

This is not the first time the IoD has criticised an individual business over salary and bonuses. In the past, it has questioned packages offered by Barclays and Sports Direct.

But the IoD did admit that this was the strongest criticism it had ever given to a company.

BG Group declined to react to the IoD's comments, but said: "We believe Helge Lund is the right person to lead BG Group. His proposed remuneration is competitive in the international oil and gas industry.

"The shareholder vote on Helge Lund's pay is in line with the letter and spirit of corporate governance legislation."

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