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Cedric Brown is to leave British Gas in April with a pension of pounds 247,000 a year, after a coup the City believes was orchestrated by Richard Giordano, the company's chairman.
Labour said Mr Brown's pension would cost the company's pension fund pounds 4m - and for the first year he will receive another pounds 120,000 as a consultant to British Gas during its planned break-up, which was confirmed yesterday.
He will also have an office, a secretary and a car to support the consultancy work and a new role he is to take on as president of the Institution of Gas Engineers.
As a new row broke out in the Commons over the terms of the chief executive's departure from his pounds 493,000-a-year job, Mr Giordano denied that last year's controversial 75 per cent pay rise was a backdoor way of topping up Mr Brown's pension before he left - and as such an alternative to a pay-off. But pensions experts suggested this may have been the motive.
Pensions Investment and Research Consultants (Pirc), which ran a campaign to persuade shareholders to vote against Mr Brown's salary rise at the company's annual meeting last May, suggested the increase could in fact have been meant as a retirement package.
Pirc said: "If shareholders were expected to approve retirement rather than remuneration packages then that should have been made explicit at the AGM."
Mr Giordano said Mr Brown would not receive any compensation for the premature end of his two-year rolling contract.
Mr Brown repeatedly insisted at a press conference and at a chaotic session before an angry crowd of TV reporters that he had himself made the decision to quit. "I was not pushed . . . I don't think anybody was a fall guy," he said, as Labour attacked the 60-year-old chief executive's leaving package in the Commons.
The Labour leader, Tony Blair, said: "When customer complaints to BG have doubled and the company is being forced to split in two today because of huge losses on gas contracts, do you think that the leaving package of the chief executive . . . is justified or not?"
John Major, the Prime Minister, said the company had been split to increase competition, "which I would have thought you would have liked".
Mr Brown was earlier embroiled in a row after attending a news conference in London when British Gas announced his retirement and the company's de-merger. The Energy minister Tim Eggar, responding to an emergency question from Labour on the splitting of British Gas, said separation of supply and transport businesses was a necessary step to open up competition.
Fat cat's thin time, page 3
Leading article, page 15
City fears, page 16
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