The recent “Financial Times” report about Shell has received publicity here and elsewhere but it deserves further wide circulation so I have posted an extract below.
I was in touch with a former very senior Shell man (now retired) this week and he told me (I quote):
“It is scandalous that the [Shell] ‘Leadership’ voted themselves such huge salaries and bonuses. As XXX put it, they pay themselves something like an order of magnitude more than the directors of 10 to 15 years ago. I would mind less if they were a little more than mediocre, but … mediocrity is the best they can achieve.”
Here is the FT extract:
Royal Dutch Shell, Europe’s largest oil group, will have to pay up to $6bn (£4.3bn) to fill the hole in its pension fund, at a time when its revenues are under pressure from the fall in oil prices, the company revealed yesterday.
In its annual filing to the US Securities and Exchange Commissions, Shell revealed an $8.3bn pension fund deficit, equal to about 5 per cent of its market capitalisation.
The filing also showed that Shell’s senior -executives received sharply higher -remuneration last year, even though its performance in terms of shareholder returns was the worst among the leading western oil companies.
Jeroen van der Veer, the chief executive who steps down in June, was paid a total of 10.3m (£9.54m) in 2008, up 58 per cent from his remuneration in 2007.
Other senior executives enjoyed steep increases. Peter Voser, the chief financial officer who will take over as chief executive in July, was given a 45 per cent rise to 4.14m.
The details on the pension deficit and pay emerged as the company delivered its yearly update.
Shell indicated that it expected to raise its dividend for the year by 5 per cent, but warned that gearing, as measured by net debt as a proportion of capital employed, would rise sharply, from 6 per cent to the “low 20s” by the end of the year.
Shell also said that it did not plan to make any further investments in wind and solar power. The planned pension contribution of $5bn-$6bn, which Shell said would come on top of its regular $1bn-$2bn contributions of recent years, adds to the financial pressure on the company.
The slump in equity markets and bond yields has taken Shell’s funded pension scheme into deficit from a $13.7bn surplus at the end of 2007.
Bonuses and -incentive payments for 2005-07 were paid even though Shell’s performance in terms of total return to shareholders ranked fourth among the “big five” international oil companies: Shell, ExxonMobil and -Chevron of the US, BP of the UK, and Total of France.