Shell stung by boardroom pay revolt

By Michael Harrison
24 April 2003
Independent, UK

The oil giant Royal Dutch/Shell received a slap across the wrists yesterday from shareholders rebelling over boardroom pay and the company's environmental record.

Almost a quarter of Shell shareholders voted against the company's remuneration report at a packed annual meeting in London. Earlier, the Shell chairman, Sir Philip Watts, was subjected to a barrage of criticism from green activists over pollution levels at Shell refineries around the world and its human rights record in countries such as Nigeria and China.

A spokesman for the National Association of Pension Funds, which had urged shareholders to oppose Shell's remuneration report, described the rebellion as a "shot across the bows". The vote was 259 million shares, or 23 per cent, against the report and 878 million, or 77 per cent, in favour - one of the biggest pay protests ever staged at a FTSE 100 company.

Sir Philip received a 55 per cent increase in basic pay and bonuses last year to £1.8m, even though Shell undershot its financial targets, and is in line to triple his pay this year under a controversial new long-term incentive scheme.

Sir Peter Job, the senior UK non-executive director on the remuneration committee, denied this was a "guaranteed heaping up of remuneration" and argued that Shell's top executives were paid far less than those in rival oil companies.

However, one small shareholder, John Farmer, drew applause when he described the pay awards as "inappropriate, outrageous and insensitive".

Most anger was directed at Shell's environmental performance, with shareholders flying in from Texas, Nigeria, South Africa and the Philippines to register their protests. Hilton Kelly who lives near Shell's Port Arthur refinery in Texas said residents faced a "constant bombardment" from toxic chemicals such as benzene. He said: "Our community is dumped on day in, day out but the only offer we get is to have our cars washed."

Sir Philip replied that Mr Kelly's experience was "prima facie evidence of a lack of trust, lack of dialogue and lack of communication" and said senior managers at the plant would talk to residents about how their complaints could be addressed.

But another protester from Durban in South Africa, where the local Shell refinery has been the focus of intense anger, said that what was needed was action, not talk. Another shareholder who lives close to a Shell fuel terminal in the Philippines accused the company of violating local law and offering bribes to prevent the facility from having to close.

She said as a compromise, Shell had offered to shrink the size of the site and erect a "green buffer zone" between the terminal and the neighbouring community, but this turned out to be less than seven feet wide.

Shareholders also protested over pay at yesterday's annual meeting of the asset manager Schroders. Twenty-six per cent of shareholders either voted against or abstained on the remuneration report, which entitles the chief executive, Michael Dobson, to a cash bonus of £1.8m every year until 2004 on top of share awards and a basic salary of £200,000.

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