Royal Dutch Shell Plc  .com Rotating Header Image

Shell Moves to Cut Executive Pay


FEBRUARY 16, 2010


LONDON—Royal Dutch Shell PLC on Tuesday proposed changes to the way it pays its executive directors in an attempt to assuage concerns that led shareholders to reject its remuneration package last year.

The proposals constitute a significant step toward greater pay restraint at one of the world’s largest companies at a time when excessive awards to executives, particularly at banks, are a political hot potato.

The salaries of Shell Chief Executive Peter Voser and Finance Chief Simon Henry will be 20% lower than those paid to their predecessors and will be frozen from July 2009 until January next year, according to proposals outlined in a letter from the chairman of Shell’s remuneration committee, Hans Wijers.

However, the maximum shares the CEO could be awarded under the performance-related long-term incentive program would be increased from two times to three times salary, “thereby providing greater alignment with shareholders’ interests,” Mr. Wijers said in the letter, which has been posted on the company’s Web site.

Shell has broadened the criteria by which this performance is assessed. Formerly, the only measure of performance was comparing total shareholder return against Shell’s peer group of integrated oil companies. This has now been broadened to include earnings per share, net cash flow from operations and oil and gas production.

The main concern that led shareholders to reject last year’s pay package was that directors were awarded a share bonus under the company’s long-term incentive plan despite performance targets being missed. The new proposals would prevent the remuneration committee from doing this, the letter said, although only for 2010. “In future, there will be no use of upward discretion in the vesting of these plans without prior shareholder engagement,” said Mr. Wijers.

The proposals are the result of a “wholesale review of remuneration policy” and extensive consultations with Shell investors, following a highly unusual vote at last year’s annual general meeting, where 60% of shareholders rejected the executive directors’ remuneration package, the letter said.

“I believe there was broad support [from shareholders] for the direction we are taking,” wrote Mr. Wijers.

Write to James Herron at [email protected]

This website and sisters,,,, and, are owned by John Donovan. There is also a Wikipedia segment.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Comment Rules

  • Please show respect to the opinions of others no matter how seemingly far-fetched.
  • Abusive, foul language, and/or divisive comments may be deleted without notice.
  • Each blog member is allowed limited comments, as displayed above the comment box.
  • Comments must be limited to the number of words displayed above the comment box.
  • Please limit one comment after any comment posted per post.