Shell investors revolt over pay and maintain pressure over climate change

Oil firm grilled over carbon emissions, but defeats motion calling for tougher targets
Adam Vaughan The Guardian 22 May 18;

Shell investors have rebelled over the company’s executive pay, as the Anglo-Dutch oil company came under pressure to take stronger action on climate change.

While chief executive Ben van Beurden’s €8.9m (£7.79m) pay package for 2017 was approved, more than a quarter of shareholders voted against the firm’s remuneration report at its annual general meeting on Tuesday.

Gerard Kleisterlee, the chair of the remuneration committee, blamed the result on proxy advisers.

Influential shareholder adviser ISS had urged investors to reject the pay award because of the company’s performance on sustainable development targets and an accident in Pakistan which led to the deaths of 221 people.

The rebellion is the latest in a series of revolts against corporate pay, including 37% of shareholders voting against or abstaining on AstroZenca’s remuneration report last week. Melrose, Inmarsat and Unilever have been hit this year with significant votes against pay packages, though Shell’s fellow oil major BP avoided one on Monday.

Shell also faced a grilling from investors over how sincere its action is on reducing carbon emissions, with about half the questions related to climate change during the four-hour AGM.

However, the company defeated a resolution calling for it to set tougher emissions targets in line with the Paris climate deal.

The resolution was backed by 5.54% of shareholders; a similar resolution in 2017 was backed by 6.3%.

“Investors are sending a clear signal to Shell and all oil and gas companies, that they will not accept a goal of halving net carbon emissions by 2050 [set by Shell],” said Mark van Baal of Follow This, the group which brought the proposal.

He noted that seven of the Netherland’s 10 biggest asset owners had supported the resolution.

Van Beurden repeatedly defended the company’s record on climate change, referring to its target to halve the carbon footprint of its products by 2050 and company scenarios showing how the world could keep temperatures below 2C.

“This ambition is truly industry-leading, nobody else comes close. It is seriously ambitious,” he told the AGM, adding that the resolution would tie the firm’s hands.

“Your company wants to lead, so let us. So follow us,” he quipped in reference to the activist shareholder group’s name.

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Van Baal accused the chief executive of misleading investors that Shell’s carbon targets were aligned with a sub-2C world. “I’m not misleading shareholders,” van Beurden retorted.

The chief executive said that at some point the firm would have to grapple with how to tie its carbon targets to executive pay, without giving a timeframe for action.

The company also faced questions over the impact of its operations in Argentina, Nigeria and the Netherlands, conditions and terms for workers, and an ongoing corruption trial in Italy.