“The oil titan is set to encounter protests over a controversial £4.8m severance deal for its former gas and power chief Linda Cook, a leading institutional shareholder told the Mail.”
By Sam Fleming
Last updated at 11:24 PM on 13th April 2010
Royal Dutch Shell faces another turbulent annual general meeting next month after failing to assuage all of its investors’ concerns about director pay.
The oil titan is set to encounter protests over a controversial £4.8m severance deal for its former gas and power chief Linda Cook, a leading institutional shareholder told the Mail.
Discontent is also simmering after chief financial officer Simon Henry moved to a Dutch employment contract, which will ensure more generous rights. And a hearty compensation package handed to former chief executive Jeroen van der Veer remains a bone of contention.
Shell suffered the humiliation of having its pay report voted down last year after discontent over the generosity of its awards emerged. Remuneration committee chief Sir Peter Job subsequently resigned.
Shell has since embarked on an intensive charm offensive as it sought to heal the rift. A long-term shareholder told the Mail: ‘There is unlikely to be a revolt on the scale of last year’s AGM, but there are still concerns about remuneration.’
The glittering deal given to Cook after she lost out in the battle to succeed Van der Veer has attracted particular attention, the shareholder said.
In addition to a £914,000 salary for 2009 and a £977,000 bonus, Cook was given a £4.8m severance payment and walked away with a pension worth £16.2m.
Shell defended Cook’s severance deal, however, saying it was calculated on a ‘standard formula’ in accordance with laws in the Netherlands, which is where the company is headquartered. Simon Henry’s contract will be covered by Dutch law following his ascent to the main board.
A spokesman said: ‘ Following 2009, we have had extensive consultation with major shareholders. Base salaries have been frozen since July 2008, except on promotion. As a result, chief executive officer and chief financial officer salaries are 20pc lower than (those of) the previous CEO and CFO.’
However, Shell is also likely to be hit by shareholder protests over its controversial oil sands exploration.
Shareholders including Cooperative Asset Management are planning to vote in favour of a resolution calling for greater transparency over its activities in the area.
Canadian oil sands are a tarlike substance that are mined at huge environmental cost. Shell’s arch-rival BP is also braced for protests over its oil sands ambitions and executive remuneration.
Shell’s ‘A’ shares slipped 7p to 1,966.5p, while BP lost 0.4p to 640.7p.
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on Apr 15th, 2010 at 10:16 am
Shell insiders will be shocked but not surprised by the revelations about Linda cook’s departure. There are two main factors at play in this sorry saga – Americanisation and diversity. Senior American executives in Shell have historically had bonus and pay structures which far exceed those of their mainly European colleagues. The uneasy relationship between Shell’s US subsidiary, Shell Oil, and the rest of RDS over the years led to a number of high-flying Americans moving into the Shell international arena to try and address this problem. In virtually every instance these moves have been unmitigated disasters.
Steve Miller was on the CMD in the 1990s and was an expensive failure. He had little or no feel for the complexity and diversity of Shell’s business outside of the US and he was eventually sent home with his tail between his legs – the only CMD member effectively to be sacked. John Hofmeister became the head honcho of Shell’s HR function and managed to unravel decades of a more paternalistic (but successful) approach to employee relations and by his own efforts reduce morale to new lows. Like Miller before him he was repatriated in the end to Houston – unliked and unmissed in Shell Centre and The Hague. Finally Linda Cook was not only supposed to smooth relations between the Dutch/British management mafia and their American cousins but also add to Shell’s diversity status by being a very senior woman on the Board. The carrot of perhaps succeeding to the top job when van der Veer retired was undoubtedly dangled in front of her – as well as a mind-blowing remuneration and pension package. Cook was by all accounts utterly unsuited to a top international job (all of her prior Shell experience had been in the US) and her ambition was such that she tried to trample on any in her way. She was universally hated and in the end Shell thankfully ducked appointing her as CEO and she cleared off in a hissy fit! Laughing all the way to the bank no doubt.