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Governance body Pirc urges ‘no’ vote on Shell pay

Reuters

Wed May 6, 2009 4:51am ED

* Pirc urges investors to vote against remuneration report

* Follows criticism from ABI, Manifest and Standard Life (Updates with details)

By Raji Menon

LONDON, May 6 (Reuters) – Corporate governance body Pirc on Wednesday urged investors in Royal Dutch Shell (RDSa.L) to vote against the oil major’s pay plans at its forthcoming annual general meeting.

Pirc’s recommendation adds to growing criticism over the Shell Remuneration Committee’s decision to exercise discretion and award managers bonuses despite the company’s failure to meet pre-set targets.

The Association of British Insurers (ABI) has issued an ‘amber top’ notice to its members over Shell’s pay plan indicating a deviation from best practice.

“Combined awards are considered potentially excessive. We have concerns over the awards vesting under the long-term incentive plan as performance targets were not met but the remuneration committee exercised its discretion,” Pirc said in a note to clients.

Pirc advises pension schemes and fund managers on corporate governance issues and recommends how they should vote at shareholder meetings.

The body also noted that exercising such discretion “undermines a consistent long-term approach to performance”.

On Tuesday, a source close to major Shell investor Standard Life Investments said the investor will vote against the pay report at the annual shareholder meeting to be held on May 19 [ID:nL5968541].

“This is the second year in a row that the remuneration committee has (rewarded) executives for below-average returns to shareholders, which raises serious questions about whose interests they are looking after,” SLI’s head of corporate governance, Guy Jubb said.

Shell has also faced attacks from SLI’s fellow top 10 investors, one of whom told Reuters they expected a protest vote of 30-40 percent at the annual meeting. Manifest, an independent governance and proxy voting agency, also criticised Shell’s remuneration report.

[ID:nL5698627] (Editing by Joel Dimmock and Jon Loades-Carter) (For the Hedge Hub blog: blogs.reuters.com/hedgehub) (For Global Investing: here))

 

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