Shell freezes pay of three directors and curbs bonuses

Shell today said it would freeze the pay of all its executive directors until next January and clamp down on bonus payments following a huge shareholder revolt last year.

Base salaries for chief executive Peter Voser, chief financial officer Simon Henry and exploration and production director Malcolm Brinded will be frozen at July 2009 levels and will not be reviewed until the start of 2011.

Shell said bonuses had also been altered in the face of criticism from shareholders. A spokesman said that in future they would be geared to ensure directors have "a strong sense of personal accountability".

Shareholders rebelled last May when investors objected to executives being rewarded "for below-average returns".

Bonus share allocations at Shell are supposedly determined by how well the Anglo-Dutch group does compared with four other majors — Total, BP, Chevron and ExxonMobil. In 2008, Shell ranked fourth in the group, which meant that executives should not have received any allocation.

However, fury was roused when the remuneration committee used its discretion to award then-chief executive Jeroen van den Veer 79,000 shares, then worth £1.3 million, all the same. Such "upward discretion" without shareholder approval has been banned.

At the time, Guy Jubb at Standard Life, which has a stake of 46.6 million shares or 1.73 per cent, said: "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."

Today Standard Life said: "We have been in ongoing consultation with Shell over remuneration and we will be evaluating these proposals very carefully."

Shell's announcement today added that in future bonuses will not be revised upwards "without shareholder engagement" and that Voser will have his shareholding increased from two times salary to three times to provide "greater alignment with shareholders' interest".