New chief will strike gold at Shell if his 100 per cent pay rise gets approval

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The Independent Online

Shell wants to more than double the pay package of its new chief executive, Jeroen van der Veer, its current chairman.

Shell wants to more than double the pay package of its new chief executive, Jeroen van der Veer, its current chairman.

The oil giant, which is merging its British and Dutch arms this summer, will propose next month that its executive pay levels be brought into line with peers like BP and ExxonMobil.

Shareholders are due to vote on the remuneration scheme, and the restructuring proposals, at the annual meeting at the end of June. Before then, the company will meet institutional investors and the Association of British Insurers, representing insurance companies among Shell's shareholders.

The company is now doing a final internal audit of its reserves. It is expected to downgrade another estimated 900 million barrels of oil and gas equivalent this week when it presents an update on the audit. At the same time, it will report annual results.

The company said in October that it had audited eight billion barrels - just over half its total reserves - and that it might have to downgrade a further 900 million barrels. Analysts predict a similar downgrade this week, after completion of the fieldwork for the audit. But the company would not guarantee there would be no more downgrades subsequently.

Shell suffered the humiliation last year of having to reclassify a fifth of its "proven" oil and gas reserves as "probable" after initial reviews. The crisis forced the company to bow to demands from shareholders to scrap its Anglo-Dutch dual board structure.

Shell has traditionally paid less to its executives than its peers. In 2002, before the reserves scandal broke, the then chairman, Sir Philip Watts, received £1.8m. His counterpart at BP, Lord Browne, earned over £3m in the same year, while the boss of the US company ExxonMobil, Lee Raymond, received £3.6m last year. Mr van der Veer received £800,000 in total in 2003, though hedid not become chairman until March last year.

Shareholders said they did not object to Shell boosting executive pay, but stressed that the remuneration committee should scrap the use of reserves as one performance criteria. They also added that executives should have the same "scorecard", or performance criteria, as staff.