Nearly 60% of Royal Dutch Shell shareholders voted today against an executive pay package in protest of what some shareholders perceived as excessive reward for missing pre-set targets.
The shareholder vote at the oil companys annual meeting in the Hague, Netherlands, was advisory and does not overturn any decisions made by the companys remuneration committee.
Shell directors could earn twice their salary in Royal Dutch Shell shares if the company ranked in the top three among a group of peers. The remuneration committee decided to award half of those additional shares even though the company did not meet the top-three target, according to sources familiar with the matter.
We were not impressed by the remuneration committees decision to exercise its discretion for the second year in a row to reward its executives for achieving below average (total shareholder return) performance, according to Guy Jubb, head of corporate governance at Standard Life Investments, in a prepared statement, which owns about 1.3% of Shell shares. Standard Life voted against the resolution to approve the remuneration plan.
Peter Montagnon, director of investment affairs at the Association of British Insurers, which also publicly criticized Shells remuneration plan, added: This shows that shareholders are very weary of how discretion is used and want to hold remuneration committees to account.
Shell officials could not be reached for comment by press time.