Financial Times: Revamped Shell set to boost executive pay: “Last week Malcolm Brinded, head of exploration and production at Shell, said the group could be forced to unbook a further 900m of its 14.35bn barrels of oil reserves, and left open the prospect of further revisions” (ShellNews.net)
By David Firn
Published: November 1 2004
Royal Dutch/Shell is planning to boost pay for senior executives as part of its corporate restructuring, but end the controversial link between bonus payments and the company's booked energy reserves.
Shell began to overhaul executive pay in May, after admitting it had overstated its proved oil reserves.
But last week's decision to dismantle the company's 97-year-old corporate structure has forced Shell to look again at the issue of how it remunerates senior executives, who have traditionally been among the lowest paid in the industry.
The restructuring will see Jeroen van der Veer move from managing chairman of the £40bn Shell Transport & Trading holding company to chief executive of a new FTSE 100 energy giant with a value of about £100bn.
Shell declined to comment on the new executive pay proposals, which are expected to bring the board's remuneration into line with pay at other major energy groups.
However, the company confirmed that is was changing the "scorecard" used to calculate executive bonuses to link performance to results and end the link with reserves. It is expected to discuss the new bonus package with institutional shareholders "in the coming weeks".
Last week Malcolm Brinded, head of exploration and production at Shell, said the group could be forced to unbook a further 900m of its 14.35bn barrels of oil reserves, and left open the prospect of further revisions. The 900m figure could rise further because Shell has only rechecked 8bn barrels of its reserves and needs to check the other 6bn.