Oil giant Royal Dutch Shell today said it had frozen salaries for top bosses following last year’s shareholder protests at its pay plans.
Chief executive Peter Voser and finance head Simon Henry – who took on the roles last year – will not see their pay reviewed again until January 2011 under the reforms.
The group’s third executive director, international exploration boss Malcolm Brinded, will also be impacted by the pay freeze, but he has already had his salary kept on hold since July 2008, according to Shell.
The move comes after Shell suffered a shareholder revolt last May, when 59.4% of investors voted against its pay proposals at the group’s annual general meeting.
It faced investor fury after making huge payouts as part of its long-term incentive plan, despite missing performance targets.
The group’s last annual report revealed that former chief executive Jeroen van der Veer received a total package worth £8.2m (€9.4m) in 2008 and was awarded 77,518 shares – worth around £1.3m (€1.48m).
Shell said in a letter to shareholders published on its website today that it wanted to “demonstrate appropriate restraint in the current economic environment”.
It stressed that, while Mr Voser and Mr Henry were given salary increases when they took on their roles last year, their salaries were around 20% lower than those paid to previous bosses.
Shell is also enforcing a mandatory deferral of 25% of any executive annual bonus into its deferred bonus plan, which is in addition to an existing voluntary deferral of up to 25%.
Hans Wijers, chairman of Shell’s remuneration committee, outlined plans to “strengthen the links” between performance measures and company strategies.
Bonus awards will be based on how well projects are delivered rather than total shareholder return, he added.
The Anglo-Dutch group was heavily criticised for admitting that it had used its discretion under previously agreed rules when deciding on the controversial 2008 bonuses.
But Mr Wijers said: “I believe it is appropriate in the current economic environment to state upfront that no upward discretion will be applied.”
Shell reported a 69% plunge in 2009 profits to $9.8bn earlier this month.
It is cutting another 1,000 jobs after the profits blow, which came after a 75% fall in fourth quarter earnings.
Mr Voser, who became chief executive last July, said on announcing the results that trading conditions had been tough in 2009 and were likely to remain challenging this year.