The Scotsman: Shell coy on bosses' performance-related pay: “Shell, which announced it was ditching its complex dual corporate structure last week in a partial bid to put its oil reserves scandal behind it, yesterday refused to confirm or deny it wanted to bring remuneration for its five executive directors in line with rivals such as BP.” (ShellNews.net)
1 Nov 04
OIL giant Royal Dutch Shell, to be formed from the merger of Netherlands-based Royal Dutch and London-based Shell Transport & Trading, is understood to be considering sharply-increased performance-related bonus packages for leading directors such as new chief executive Jeroen van der Veer.
Shell, which announced it was ditching its complex dual corporate structure last week in a partial bid to put its oil reserves scandal behind it, yesterday refused to confirm or deny it wanted to bring remuneration for its five executive directors in line with rivals such as BP. "We are not commenting, there is no guidance we can give on this," a Shell spokesman said.
However, sources at the weekend suggested the group believes it can allay any shareholder concerns on the enhanced pay packages by pointing out that there will be strict performance criteria for the bonuses to be triggered.
No significant increases in the directors’ basic pay is expected. Last year van der Veer, as chairman of Royal Dutch, earned 1.13 million (£785,000).
Analysts said yesterday they doubted whether there would be any major protest by Shell shareholders at enhanced remuneration arrangements for the key executives, who operationally will replace the old committee of managing directors, even though they have suffered from a wobbly share price amid the heavy negative public relations fallout from five reserves overstatements this year. One said: "There is no doubt Royal Dutch Shell is creating a fundamentally new operating structure from what was there before.
"If those executives can deliver going forward and draw a line under the reserves fiasco, any increase in bonuses will be seen as money well spent.
"However, the devil will be in the detail, as to how stringent the performance criteria are for those rewards to be triggered."
Shell has traditionally been seen in the oil industry as one of the lowest payers compared to its major peers.
Van der Veer’s pay, for instance, was dwarfed by the £3.2m paid to BP boss Lord Browne and the £4m paid to Lee Raymond, the chief of the world’s biggest oil business, ExxonMobil.