Shell to curb pay, bonuses after investor revolt

The head of Shell's remuneration committee said salaries for Voser and Chief Financial Officer Simon Henry, which are 20 percent lower than their predecessors', were being frozen until 2011.

This year, directors will not award management bonuses if they fail to meet pre-agreed targets without "prior shareholder engagement."

Top management received bonuses for 2008 despite not hitting targets, prompting 60 percent of the Shell investors who voted to oppose the 2008 remuneration report.

Niels Lemmers, spokesman for the Dutch shareholder association VEB, said he would have liked Shell to have given investors the right to block discretionary payouts and for the threshold of performance at which a bonus was payable to have been lifted.

"We think it's very good that Shell has finally started a dialogue with shareholders but it's still too easy to get a bonus," Lemmers said.

Investors in European corporates, who traditionally vote overwhelmingly in favour of managements' plans, registered their dissatisfaction with companies' handling of and contribution to the global economic crisis in unprecedented numbers in 2009.

A third of voters at mining group Xstrata's annual general meeting opposed its pay policy, and more than a third of investors opposed oil major BP's executive pay plan.

A majority of investors in troubled bank Royal Bank of Scotland , housebuilder Bellway and Provident Financial also opposed pay plans in 2009, and last week, residential landlord Grainger lost a shareholder vote on executive pay.

SAME STRUCTURE

Hans Wijers, chairman of Shell's Remuneration Committee told investors in a letter -- a copy of which was published on Shell's web site on Tuesday -- he wanted to "demonstrate appropriate restraint in the current economic environment."

Nonetheless, Hague-based Shell's bonus structure remains largely intact and of the same magnitude.

A plan to tie payouts from the deferred bonus scheme to performance could see executives receive larger payouts.

Under the new rules, management at Shell, Europe's second-largest oil company by market capitalisation, will be forced to hold shares awarded under the company's long-term incentive plan for two years after they are awarded.

Annual bonuses will be tied to project delivery, with delay or budget overshoots punished.

Also, as the bonuses are based on percentages of base salaries, the pay freeze, effective July 2009 to January 2011, will restrain the total amount of the bonuses to some extent.

Shell said it had also introduced a right to claw back incentives paid within the previous 12 months in the instance of any material misstatements.

In 2004, Shell's shares dived after it admitted overstating its reserves.

The key metric in the bonus plan remains Shell's performance against other supermajors -- U.S. rivals Exxon Mobil and Chevron , London-based BP, and France's Total .

In future, Shell's CEO will have to have a shareholding in the company equal to three times his salary, to provide "greater alignment with shareholders' interests."

The current shareholding guideline for executive directors, including the CEO and CFO, is two times salary, Shell said.

Jeroen van der Veer, who retired as chief executive in June 2009, received total compensation of $15 million for 2008, according to Shell's annual report.

Voser, who was chief financial officer until he took over in July, earned $6 million.

Shell's London-listed "A" shares were not affected by the news, trading up 0.8 percent at 1,741 pence at 2:44 p.m., compared to a 0.4 percent rise in the DJ Stoxx European oil and gas sector index <.SXEP>.

(Reporting by Tom Bergin; Editing by Erica Billingham, Louise Heavens and Karen Foster)