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Outgoing Shell chief calls for executive pay reform

Financial Times

By Carola Hoyos in London and Michael Steen in Amsterdam

Published: June 9 2009 03:00 | Last updated: June 9 2009 03:00

The outgoing chief executive of Royal Dutch Shell, who was the focus of a shareholder revolt over pay at the multinational oil company, has called for reform of how executives are rewarded.

Jeroen van der Veer, who steps down this month, faced criticism from shareholders for receiving a €1.35m ($1.87m) bonus from an incentive scheme even though the company failed to meet performance targets.

Anger over Shell’s bonuses sparked one of the biggest investor rebellions over directors’ pay when 59 per cent of the company’s shareholders last month voted down its remuneration report.

Apart from the bonus, Mr van der Veer also received a 58 per cent pay rise in 2008 to €10.3m.

But Mr van der Veer has now conceded that varying pay levels would not have affected his own performance. “You have to realise: if I had been paid 50 per cent more, I would not have done it better. If I had been paid 50 per cent less, then I would not have done it worse,” he told the Financial Times at a conference in Abu Dhabi.

Mr van der Veer said companies needed to respond to rising concerns about executive pay.

He did not specify how executive pay structures should be reformed, but said: “It is clear to me that people are very concerned about executive remuneration and good companies should take that on board.”

The admission on pay by Mr van der Veer prompted a sceptical response from VEB, the Dutch shareholders’ association.

“If that’s the case why does he not tell the supervisory board, ‘I won’t accept the bonus shares that have been awarded in this scheme?’ ” VEB’s chairman said.

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