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Shell goes on the road to charm City investors after shareholder revolt home

Oil group Shell is wheeling out its top directors at a series of meetings in an attempt to rebuild its relations with angry investors

  •, Tuesday 2 June 2009 22.03 BST

Shell is planning a string of back-to-back meetings in which it will wheel out top executives and directors in an attempt to rebuild shattered relations with its big City shareholders.

The “three-strand” roadshow will give investors the opportunity to spell out why they opposed multimillion pound executive share awards last month when they voted down the oil group’s remuneration report in a landmark protest vote at the company’s annual meeting.

It will also give Shell the chance to defend former Reuters’ chairman Sir Peter Job, who, as chairman of the Shell remuneration committee, sanctioned the controversial payouts. Job will also go on the road to meet critics who are demanding his resignation in the wake of the vote.

The investors voted 60% against the remuneration report in protest at some £3.6m of share awards paid to five top executives, including outgoing chief executive Jeroen van der Veer, even though the group had failed to meet the targets set for the payments.

Under the terms of the pay scheme the executives should have received nothing, but the remuneration committee, led by Job, used a clause in the pay scheme allowing the committee to exercise its “discretion” to wave the awards through.

At the meeting, held simultaneously in London and The Hague, institutional shareholders spoke from the floor to oppose the payouts, even though they had already been made and cannot be clawed back.

One shareholder group said: “The system is sick and needs fixing.” The protest vote was one of the biggest ever recorded. The chairman, Jorma Ollila, appeared contrite, telling the meeting: “We take the outcome of this vote very seriously and we will reflect carefully upon it.”

Many shareholders, however, remain determined to force change on the Shell board. One said that they wanted “personality changes”, specifically the removal of Job.

The fund manager added: “It is incredibly important that there is a sufficient apology and that they have learned their lessons. We must never again be in such a situation.”

Another fund manager said the Shell board did not appear to understand why they were so incensed: “They just don’t get it,” he said.

City investors have been taking a new and much harder line with companies whose pay policies appear over-generous this year. They have been stung by criticism from City minister Lord Myners that they failed adequately to police British boardrooms in the wake of the banking crisis. As a result they now seem determined to use their power. Ten of the 16 biggest revolts at blue chip companies have come this year. One leading fund manager has said companies “haven’t woken up to the different circumstances we are now in. There is a distinct lag between shareholders’ expectations and executive expectations”.

In a letter to shareholders before the Shell annual meeting, Job had referred to the pay row as “an irritant” and said Shell had already gone “a long way” to meeting shareholders’ concerns.

But a spokesman for Shell said: “We are taking the outcome of the vote seriously and discussing the implications of the vote with shareholders.”

In the planned “three-strand” approach, he said, the fund managers would be able to express their anger to Ollila in a series of group and face to face meetings planned for the coming weeks.

A second round of meetings “specifically on remuneration”, said a Shell spokesman, were being lined up for the “near future”. They will be hosted by Shell’s director of human resources and the oil group’s director of investor relations.

In addition, arrangements are being made for Job and his fellow remuneration committee members – former diplomat Lord Kerr and Deutsche Bank boss Josef Ackermann – to do their own “roadshow”, holding their own discussions, directly with shareholders, in the autumn.

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