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ALEX BRUMMER COMMENT: Standard riposte to greed

Daily Mail

Last updated at 11:39 PM on 19th May 2009

If Shell had thought that holding its annual meeting in the Hague would keep dissident shareholders away it will be bitterly disappointed.

The blue-chip oil company suffered one of the most humiliating defeats over pay policy since shareholders forced GlaxoSmithKline into a rethink of Jean-Pierre Garnier’s remuneration package in 2003.

Those present were treated to a neat confrontation between two people with plain single-syllable British names: Jubb and Job.

Guy Jubb from the mighty Edinburgh-based investor Standard Life set an example to institutional shareholders everywhere by standing up and publicly chiding Shell for rewarding executives two years in a row ‘for below average performance’.

Former Reuters boss Sir Peter Job, who heads the pay committee, claimed to be ‘listening’ when he clearly was not.

It might have been thought that Shell would have learned some humility after the reserves misstatement scandal.

Royal Dutch Shell's Peter Voser, chief executive Jeroen van der Veer and Chairman of the Board Jorma Ollilla at yesterday's meeting  

Royal Dutch Shell’s Peter Voser, chief executive Jeroen van der Veer and Chairman of the Board Jorma Ollilla at yesterday’s meeting


But it clearly has cloth ears. In much the same way as it chose to ignore British private investors when Shell and Royal Dutch were fully merged – leaving them with an unacceptable tax bill – it clearly thinks that it can safely override corporate governance.

After the public outrage over bankers’ pay it might have been thought that Shell would be alive to the public relations risks of going out on a limb over bonuses.

Yet despite warnings from the main UK-based shareholder groups, including the Association of British Insurers, it just ploughed on with the largesse regardless.

Shell directors, like MPs, seem to think there is one rule for its directors and another for the little people.

If chairman Jorma Ollila had any sense, he would dismiss Job and the remuneration committee and cancel the bonus scheme forthwith, demanding repayment of any sums outstanding. Boardroom excess is no more acceptable than that in the Commons.

One person who will presumably be grateful for Shell’s comeuppance is Simon Wolfson at Next, who had hoped that no one would notice that the company had quietly softened the requirements for bonuses.

At a poorly attended meeting in a former bed and breakfast in Leicester some 20 per cent of investors refused to support the new pay deal. This ought to be enough to send directors back to the drawing board.

If Wolfson really has Conservative political ambitions, it would be in his best interest to ditch Next’s get-rich-quick ethos fast.

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