Wijers says Shell has learnt pay lesson

Sun, 7 Feb 2010 23:07:28 +0000

Royal Dutch Shell, the oil company that suffered a humiliating defeat by shareholders on pay last year, made a mistake by under-estimating how fast the mood on executive salaries was changing, according to the new head of its remuneration committee.In his first comments in his new role, Hans Wijers, chief executive of paint company Akzo Nobel and a former Dutch economics minister, said the Anglo-Dutch oil major had failed to see how tensions over bankers' pay had increased investors' concerns about executive pay.The shareholder vote against the pay package last May was one of the biggest investor rebellions against a European company and sent shockwaves through boardrooms."It was a surprise for some senior managers and non-executive directors that this happened . . . What they missed was the fast-moving climate around remuneration, in the UK particularly but more broadly around the world," Mr Wijers said.Shell is refining its pay policy ahead of its annual meeting in May. Mr Wijers, who joined the Shell board in January 2009 and became head of its remuneration committee in October, indicated that the board would have more contact with shareholders.As head of the remuneration committee, Mr Wijers will be paid about €150,000 (£131,220)."The lesson learned is that you have to have your antennas out constantly to see what happens with shareholders and society, and things can change quite rapidly," he said.Investors rebelled over the decision by the remuneration committee, then headed by Sir Peter Job, to give executives a discretionary award for performance from 2006-08 in spite of missing targets. Mr Wijers made clear that where a board was given discretion to pay bonuses when targets were missed it should act cautiously."If you use discretion in this kind of context then you had better first speak to shareholders," he said.The force of the rebellion left Shell directors shocked in spite of a previous revolt against pay the year before. Jorma Ollila, chairman, vowed not to make the same mistake again and to reform its pay policy.