Bonus led to a thin time for fattest cat

NIGEL COPE and

PETER RODGERS

Cedric Brown's 43 years as Britain's most important gasman unravelled in just 15 months. The seeds of his downfall were sown from the moment the details of his 75 per cent pay increase became public in November 1994: the knives were out for the man who became Britain's best-known "fat cat".

Ever since that debacle, the bluff Yorkshireman, who joined British Gas as a trainee engineer in 1952 and worked his way up to chief executive, has been subjected to a degree of public vilification rarely seen in British commercial life.

During a period in which British Gas cut jobs, saw its profits slump and appeared hesitant as its cosy state monopoly crumbled, Mr Brown had already become the focus for both customers' and shareholders' discontent.

His florid features regularly stared out of newspaper pages as the campaign over excessive executive pay and under- performance reached fever pitch. Many said that after this his departure was inevitable.

He clung grimly to his post but was forced to endure criticism, not just of his management ability, but even of his choice of house, a mock-Georgian pile in Buckinghamshire.

At last year's annual meeting, when nearly 5,000 shareholders descended on the London Arena in Docklands, east London, he arrived to find an inflatable pig hoisted above the stadium. "Cedric the Pig" became a symbol of boardroom greed.

The announcement of his pay increase, to pounds 475,000, was handled badly - one of several PR gaffes which have haunted the company in recent years. The issue hit a nerve and sparked the Greenbury review of executive pay.

In fact, the countdown to Mr Brown's demise may have already begun. A key player in the drama was Richard Giordano, the polished former New York lawyer who joined British Gas in 1993 and became chairman a year later. His aim was to shake up the company and bring in new management to follow Cedric Brown.

His appointment, together with the recruitment of a new finance director, Roy Gardner, also in 1994, sparked a succession battle between Gardner and Philip Rogerson, director of the pipeline company Transco.

Giordano and Brown could hardly be more different. Brown, 60, is a plain- speaking Yorkshireman who worked his way up from the factory floor. Giordano, 61, is a high-flying international businessman, who cut his teeth as a top-flight lawyer in New York before joining BOC, the industrial gases group. There he developed a reputation as a fat cat himself. In the 1980s he regularly earned more than pounds 1m. At British Gas he is paid a total of pounds 470,000 for a three- to four-day week.

Well-groomed and tanned, he excels at the kind of public speaking Brown finds difficult. It was Giordano who has been the public face of British Gas while Cedric Brown faced a barrage of criticism. At the annual meeting last year, Giordano used his skills to defuse a charged atmosphere by taking questions from smaller shareholders and even meeting demonstrators outside the hall to hear their views.

But Mr Brown hung on longer than everyone thought. Asked if he would step down two year ago he said: "No bloody way. I can be a bit of a Geoff Boycott when I want to be. I'm going to keep my head down and my bat straight and take the odd swipe at the brickbats."

But as he stuck at the crease, his captain was changing team tactics. Mr Giordano was pressing ahead with a raft of boardroom changes.

Mr Brown toughed it out as ever yesterday and adamantly denied that he had been forced out of the company by Mr Giordano.

Besieged by TV interviewers after the British Gas press conference, he said, "I was not pushed. I don't think anybody is a fall-guy." He insisted repeatedly that he had made the decision to quit himself and said that the two younger chief executives the group was seeking to run its demerged parts "don't want the old men staggering around".

Mr Brown is believed to have told Mr Giordano and other non-executive directors of his plans to quit several weeks ago, and aides said the issue was not part of the board meeting that finally approved the demerger, late on Tuesday afternoon.

It was Mr Brown who went straight from that meeting to dinner with union officials to brief them on the plans, from where the news quickly spread to Westminster.

However, insiders say Mr Brown has been gradually isolated by Mr Giordano since at least last summer, when the chairman began to steer the company into a U-turn that would finally accept the idea of splitting the company in two - first proposed in a Monopolies Commission report in 1993 that the Government did not accept.

During the autumn, Russ Herbert, Howard Dalton and Norman Blacker - the last remaining pre-privatisation directors aside from Mr Brown - retired early, leaving Mr Brown isolated, and under enormous pressure.

The old guard, as they were known, had , behind the scenes, been strongly opposed to demerger plans. Though Mr Brown was outwardly supportive yesterday, it was with a distinct lack of enthusiasm.