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Up to 10,000 jobs expected to go in Shell restructuring

Times Online
September 12, 2009

Shell tries to quell investor anger over executive pay

Robin Pagnamenta, Energy Editor

The Shell director at the centre of a shareholder revolt over excessive boardroom pay will step down from the oil group, the company said yesterday.

Sir Peter Job, chairman of Shell’s remuneration committee, will retire from that role at the end of this month and leave the company next year, according to a statement from the group’s board, which met yesterday in the Hague.

Shell said it had appointed Hans Wijers, a former Dutch economics minister who is chief executive of AkzoNobel, the chemicals and paints group, as his replacement.

Sir Peter, 65, became a focus for shareholder anger this year after awarding what were widely considered to be overly generous bonuses to Shell executives.

In May, investors holding 60 per cent of the shares in Shell voted down a pay settlement in which Sir Peter awarded a €1.35 million (£1.2 million) bonus to Jeroen van der Veer, the outgoing chief executive, even though the company had failed to meet performance targets for 2006 to 2008.

Sir Peter, formerly chief executive of Reuters, who also serves as a non-executive director at Schroders, will remain as a member of Shell’s remuneration committee until its next annual meeting in May 2010, when a replacement will be announced.

The company also said that Lord Kerr of Kinlochard, a former British Ambassador to America who is another member of Shell’s three-man remuneration committee, will also step down and will join the group’s audit committee instead.

Josef Ackermann, Deutsche Bank’s chief executive, the third member of the committee, will remain in place.

Jorma Ollila, chairman of Shell, said: “The changes that we have announced today make sure that we have the right mix of new experience and good continuity in the board committees, and I am looking forward to this new line-up.”

The shake-up comes as Peter Voser, the group’s new chief executive, continues to stamp his mark on the Anglo-Dutch oil company.

Mr Voser, who took over from Mr van der Veer two months ago, is forcing through an aggressive cost-cutting programme that has already led to the departure of more than 150 senior managers. Up to 10,000 jobs are expected to go during the restructuring.

The dispute with shareholders over excessive pay led some investors to call for the committee’s resignation.

Franklin Mutual, part of the Templeton group of funds in America, said the defence offered by Sir Peter at Shell’s annual meeting was “pathetic”.

At the time, Mr Ollila said: “We are taking this very seriously and we will be meeting with shareholders to take the right decisions.”

Under a three-year scheme set out by Sir Peter in 2005, Shell directors would have earned up to 200 per cent of their salaries in shares if the company outperformed three peers.

The company finished fourth but the remuneration committee decided to exercise discretion and allow some of the award anyway.

Yesterday’s announcement from Shell pointed out that, by the time Sir Peter retires from Shell, he will have served as a non-executive director for nine years — affecting his independence as a director.

Mr Wijers serves on Shell’s board as a member of the corporate and social responsibility committee.

Oil group goes Dutch

• Hans Wijers, the former Dutch Economics Minister, will become the chairman of Shell’s remuneration committee. He was appointed as non-executive director of Shell in January

• He joined Akzo Nobel, the chemicals and paints giant that bought ICI for £8 billion in January 2008, as a board member in 2002. He was appointed chairman and chief executive in May 2003

• He obtained a PhD in economics in 1982 while teaching at the Erasmus University, Rotterdam. Later he became senior managing partner at Boston Consulting Group (BCG) in the Netherlands

• He served as Minister for Economic Affairs in the Netherlands from 1994 to 1998

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