(Updates with details, context, background throughout.)
By Alexis Flynn
Royal Dutch Shell PLC (RDSA, RDSB.LN) shareholders showed their ire over high executive pay with 9% of investors rejecting the company's remuneration report at Shell's annual general meeting Tuesday.
While the overwhelming majority of Shell shareholders backed paying Chief Executive Peter Voser EUR11.7 million and former exploration director Malcolm Brinded EUR11.4 million for their 2011 performance, the number opposed rose substantially from last year, when only 2% of investors voted against the remuneration report.
The shot across the board's bows is the latest sign of discontent at how much top corporate managers are being paid. In what observers have dubbed the "shareholder spring," an increasing number of investors have used AGMs to protest what they perceive to be excessive levels of pay.
Just over 90% of Shell shareholders approved the company's pay package following an assembly in which several investors gave a withering assessment of current rates of executive remuneration. Last month, investors in rival BP PLC (BP.LN) sent a similar message at their annual general meeting, with 11% of holders voting down their executive pay package. And amid signs of an emerging trend at resource-producing firms, 67% of Cairn Energy PLC (>> Cairn Energy PLC) shareholders decisively rejected the Scottish oil explorer's pay report last Thursday.
Martin Simons, who said he has been a Shell shareholder for 50 years, bemoaned the Anglo-Dutch firm's top managers getting a 59% pay rise at a time when dividends have remained static. Voser's pay package more than doubled last year, taking into account bonuses and share incentives.
"Pay inflation in these times isn't appropriate. Companies should pay higher dividends instead," said Simons.
However, Shell said the high pay reflected a year of bumper profitability. Shell's 2011 net profit was $29.7 billion, a 47.7% rise from 2010.
A Shell spokesman said: "Shell's remuneration policy firmly links executive compensation with the performance of the company, and the 2011 outcomes reflect what was a positive year for the company."
Some shareholders excoriated the board for paying such a high package to Brinded, who last month stepped down as executive director for exploration and production. One investor described the award as "grossly overgenerous" and demanded to know whether Brinded was ousted by the board or if he left voluntarily, saying that if it were the former, then he shouldn't qualify for a performance bonus.
The accusation was strongly rejected by the head of the remuneration committee, Hans Wijers, who said Brinded's departure and pay package were part of a managed succession process. "We applied the rules according to that plan," said Wijers. "Malcolm's performance was measured as good. He worked until his very last day."
The meeting was also an opportunity for rights and environmental activists with nominal equity to quiz Voser and Chairman Jorma Ollila on issues such as Shell's track record in the Niger Delta and its controversial plans to drill for oil in the Arctic.
Ollila remained deadpan throughout, failing to crack a smile when one activist shareholder claimed to have intercepted a thank-you letter from "Cockroaches Against Humanity" that she said congratulated the company on its role on fast-tracking climate change and with it, the inevitable demise of humankind.
-By Alexis Flynn, Dow Jones Newswires, +44 207 842 9471; [email protected]