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Shell’s Labor Costs Rose In 2011 Despite Fewer Workers

Published March 15, 2012: Dow Jones Newswires

LONDON –  The cost of Royal Dutch Shell PLC’s global work force rose 2.8% last year, even though the Anglo-Dutch company reduced its overall number of employees by some 7.2% as the company continues to roll out a long-term plan to shrink headcount.

In recent years, Shell has sought to reshape its portfolio, selling off assets in less-profitable areas like refining and marketing. Chief Executive Peter Voser had made reducing the firm’s overall cost base, including labor, part of his strategic mandate when he assumed his position in 2009.

Since then, the firm has cut its work force by 10% with the majority of the departures coming from the refining and marketing division.

Remuneration for the firm’s remaining 90,000 employees increased to $11.1 billion for 2011. The previous year, Shell paid $10.6 billion to 97,000 workers, figures from the company’s annual report showed.

The overall cost of labor–including share options given to employees, tax obligations and retirement benefits–rose to $14.5 billion from $14.1 billion in 2010.

Senior executive take-home pay soared, thanks in large part to long-term incentive bonuses and awards being vested.

Voser’s overall compensation more than doubled from a year earlier to EUR11.7 million ($15.3 million). This was lifted in large part by a bonus of EUR3.5 million and EUR6.5 million awarded under a long-term incentive scheme. Voser’s base salary for 2011 was EUR1.5 million.

Outgoing exploration director Malcolm Brinded will receive EUR2.52 million in severance pay, Shell said. His overall remuneration package for 2011 was EUR11.4 million, according to the report.

“The key reason for the increase in overall employee remuneration, despite the headcount reduction–which was mainly due to divestments that occurred in 2011–was the increased bonus payment across the company, reflecting the positive year that 2011 was for Shell,” a Shell spokesman said.

The company posted a 54% increase in net profit for 2011 to $29 billion.

Copyright © 2012 Dow Jones Newswires

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