Angry Shell shareholders vote against bosses' pay deals

Published on Tuesday 19 May 2009 21:55

ROYAL Dutch Shell suffered a dramatic shareholder revolt last night, amid fury over recent pay awards to its senior executives.

Nearly two-thirds of investors voted against the oil giant's remuneration report at the annual general meeting held jointly in The Hague and London.

A total of 59.4 per cent of shareholders voted against the pay plans as the company came under fire for making huge pay-outs as part of its long-term incentive plan, despite missing performance targets.

But the shareholder rejection – a rare occurrence in UK corporate history – is only advisory and will not mean pay deals for senior executives being ditched.

Sir Peter Job, chairman of the British-Dutch group's remuneration committee, said: "We take this outcome very seriously and we'll reflect carefully on it. We have already introduced additional performance measures for future awards, reflecting comments from shareholders."

According to Shell's annual report, chief executive Jeroen van der Veer, who received a total package worth 8.2 million in 2008, was recently awarded 77,518 shares – worth almost 1.3m at current prices.

The firm maintained that it had used its discretion under previously agreed rules when deciding on the bonuses.

Its incentive award targets are largely based on its performance against its peers – BP, US firms Chevron and ExxonMobil and France's Total.

Despite record 22 billion profits last year on soaring oil prices, Shell was ranked fourth out of five in performance tables in the oil industry.

This should have meant no share awards were made to executives under the group's long-term incentive plan. But Shell's remuneration committee decided that the difference between third and fourth place was "marginal" and therefore allowed pay-outs of 50 per cent of the maximum entitlement.

Yesterday's vote demonstrated investor discontent at the decision and came after at least two voting advisory firms, including the Association of British Insurers, recommended throwing out the remuneration report.

Shell said it had "regular engagements with major shareholders" and would discuss the vote's implications with them.