Royal Dutch Shell PLC has withstood the two most debated issues at its shareholder meeting — the boss's pay and responsibility in tackling climate change. But not without a degree of drama.
The company won the backing of about 94% of shareholders to not set specific emission-reduction targets, with CEO Ben van Beurden saying it is taking "leadership" on the issue. However, while almost 75% of investors also approved the remuneration report, it faced stiffer resistance after an influential advisory firm asked them to reject the package.
Mr. van Beurden has said he understands best how to steer Europe's largest oil and gas company through a life-changing energy transition, and is several steps ahead of what activist shareholders are demanding. A group of investors, who together manage more than $10 trillion of funds, last week wanted oil companies globally to take tougher action on emissions. Shell has faced a resolution on climate targets from investor group Follow This for a third year in a row.
"We hear Follow This wants us to take leadership. Your company is taking leadership. My response is: follow us," Mr. van Beurden said. "We have ambitions completely consistent and compatible with the Paris agreement."
The push to eliminate carbon emissions from the world is a massive challenge for oil and gas companies. By Shell's estimate, to achieve goals set out in the Paris climate agreement and reduce the risk of catastrophic climate change, by 2060 the world must be eliminating more carbon than it's emitting.
Follow This argued Shell's ambitions weren't good enough and that it's misleading to tell shareholders its plans are aligned with the Paris agreement. Mr. van Beurden forcefully rejected the suggestion, right before the results of the vote were displayed on a large screen.
Mark van Baal, the founder of Follow This, told reporters after the meeting that he was pleased there was a debate on the topic. He said Shell's announcement last year that it would set climate ambitions, which included reducing emissions from customers using their products, was partly due to Follow This's advocacy.
It was, however, not all plain sailing for Shell. While the company won support for its remuneration report, including Mr. van Beurden's €8.54 million ($10 million) pay last year, more than 25% of investors rejected it compared with about 8% last year.
The remuneration report was supported by the $355.9 billion California Public Employees' Retirement System, Sacramento; $224.8 billion California State Teachers' Retirement System, West Sacramento; and the C$189.5 billion ($148 billion) Ontario Teachers' Pension Plan, Toronto. Pension funds that opposed the report included the $146 billion Texas Teacher Retirement System, Austin; $204.9 billion Florida State Board of Administration, Tallahassee; and the C$356.1 billion Canada Pension Plan Investment Board, Toronto, according to their proxy-voting disclosures.
Acknowledging that a number of investors voted against this year's remuneration report, Shell said in a news release Tuesday that it "will continue to engage constructively with (its) shareholders to reflect carefully on any feedback (it receives) from them and would particularly welcome the opportunity to work with proxy advisers more closely in the future, to better serve shareholder needs."
Institutional Shareholder Services, an adviser on corporate governance, had recommended rejecting the report because the company was initially "silent" on a fatal accident in Pakistan.
The catastrophe occurred in June, after a fuel truck being driven by a Shell subcontractor rolled over in Punjab province. People from a nearby village approached the site to collect spilling fuel, which then ignited, killing 221 people and injuring 56 others.
"We must learn from this devastating event," Shell Chairman Chad Holliday said at the meeting. "We are doing a deep learning process around this tragedy."
Meaghan Kilroy contributed to this story.