The Guardian (UK): Investors challenge Shell chief's pay: “Investors are thought to be anxious not to exert too much pressure on Shell, which has worked hard to repair its relationship with shareholders after last year's reserving scandal.” (ShellNews.net) 8 March 05
JILL TREANOR AND TERRY MACALISTER
Shell has become the latest leading oil company to run into trouble with investors over the structure of a new bonus package for executives.
City investors are thought to have requested changes to a deal drawn up for its new chief executive, Jeroen van der Veer. Rival BP was recently forced to dilute some of its plans for chief executive Lord Browne.
Pay in the oil world is a sensitive issue because many motorists are convinced companies are making record profits by charging too much at petrol stations.
Shell investors, who were shown the remuneration package last month, have asked the oil company to rejig elements of the plan that are intended to link Mr van der Veer's pay to the group's performance.
Institutional investors are concerned that the structure of the plan would allow Mr van der Veer to be rewarded too highly for an average performance. They have also expressed doubts about the number of companies in the group against which Shell is measuring its performance.
Like BP, Shell has only four other companies to compare its performance against, which some investors believe could make it too easy for the plan to pay out.
Shell said it could not comment on its talks with investors, saying this was a matter for the remuneration committee chaired by Aarnout Loudon, who is also chairman of the supervisory board at the Dutch banking group ABN Amro.
The matter will not be finalised until it has been taken to the Shell annual meeting on June 28, a company spokesman confirmed.
But it is thought that the matter could come up for further discussion at a board meeting possibly as soon as this week.
Investors are thought to be anxious not to exert too much pressure on Shell, which has worked hard to repair its relationship with shareholders after last year's reserving scandal. They are believed to be keen to avoid a showdown over pay, particularly as the Shell executives are regarded as relatively low-paid compared with some of their peers.
Even so, the concerns about the package being prepared for Mr van der Veer have been raised in the hope that the company will be able to make the necessary changes.
The concerns over Shell have been made known just as BP prepares to publish its annual report, which is likely to reveal that Lord Browne earned pounds 5.5m last year.
BP altered its pay scheme for its chief executive after leading institutional investors complained of insufficiently stringent performance criteria. The concerns about the original BP plan are similar to those that have been raised about the Shell proposal, which has already made major concessions over corporate governance.
The Anglo-Dutch group has ended its near-100-year dual corporate structure and created one London-listed company. It has also introduced the chief executive's role.