UPDATE: Standard Life Slams Shell's Board Over Executive Bonus Plans
May 05 2009 - 12:11PM
Dow Jones News
Royal Dutch Shell PLC (RDSB.LN) investor Standard Life
Investments Tuesday criticized the company's remuneration committee
over plans to pay executives a bonus despite failing to meet
performance conditions.
"As a matter of principle we don't support rewarding executives
for achieving unchallenging performance conditions," said Guy Jubb,
head of corporate governance at Standard Life Investments, which is
part of asset manager Standard Life PLC (SL.LN), in a
statement.
"This is the second year in a row that the remuneration
committee has used its discretion to reward the executives for
below-average returns to shareholders, which raises serious
questions about whose interests they are looking after. We have
voted against Shell's Remuneration Report for each of the last
three years," Jubb said.
Shell awards executives shares related to the performance of the
company relative to its peers. From 2006 to 2008, the company
ranked fourth among its peers, which under the rules of the
incentive scheme should have meant executives received no
bonus.
The difference with the third-placed company, Total SA (TOT),
was marginal and the remuneration committee looked at a variety of
performance measures and results and concluded that the ranking
"didn't reflect Shell's underlying strong performance," a company
spokesman said.
Standard Life Investments is the fifth largest holder of Shell B
shares with 1.92% of the float, and the 16th largest holder of A
shares with 0.37%, according to FactSet data.
The Association of British Insurers, which advises insurance
companies that invest in equities on corporate governance, has
issued an "amber" alert on Shell's remuneration plans, and
shareholders should consider if the exercise of discretion is
appropriate in this case, a spokesman said.
The ABI recently issued a similar alert for BP PLC (BP), whose
remuneration committee also used its discretion to award shares to
executives, when the rules of its long-term incentive scheme said
they should receive nothing. At BP's AGM last month, 38% of
shareholders opposed the executives' 2008 pay package.
Company Web site: www.shell.com
-By James Herron, Dow Jones Newswires; +44 (0)20 7842 9317;
james.herron@dowjones.com