Investors in Royal Dutch Shell turned on the oil company's management yesterday, with almost 60 per cent voting against planned remuneration packages for executives. However, the group said it intended to award the payouts anyway.
The board of directors faced angry shareholders at the group's annual general meeting in the Hague yesterday, which was also beamed live to British investors who gathered at the Barbican Centre in London.
Shareholders are furious that Shell plans to award bonuses this year, even though the company missed its self-imposed performance targets. In an electronic ballot yesterday, 59.42 per cent of shareholders voted against the remuneration report. In a similar move a month ago, a third of BP shareholders voted against their board's proposed remuneration package.
Guy Jubb, the head of corporate governance at Standard Life Investments, criticised Shell, saying his company was "not impressed by the remuneration committee's decision to exercise its discretion for the second year in a row to reward its executives for below average performance."
The committee can use discretion when targets are "narrowly missed, as in this case," according to a Shell spokeswoman.
After the chastening vote, Shell's chairman, Jorma Ollilia, said: "We take the outcome of this vote very seriously and we will reflect carefully upon it." However, the bonuses will be paid as planned because the vote is only advisory. It is not the first time shareholders have criticised management about the group's pay structure. Shell said it had already strengthened its performance measures for future pay awards.
The Co-operative Asset Management welcomed the defeat, saying it was the third year it had voted against the report. Abigail Herron, a corporate governance analyst at the group, said: "It is time that the company listened to its shareholders."