Shareholders grant their blessing to Royal Dutch Shell's executive pay, but here's why some investors are not happy


It's not exactly happy faces all round at Shell's AGM (Source: Getty)

Royal Dutch Shell's resolution on executive pay was passed with relative ease at its AGM today, but some investors are less than pleased about what the company had to offer.

Royal London Asset Management, which holds shares worth £936m in the oil company, has revealed that it voted against the resolution relating to the directors' remuneration report, as it had also done in 2014 and 2015.

"The senior executive pay awards last year are not sufficiently justified by the company’s financial performance," said Ashley Hamilton Claxton, corporate governance manager at Royal London Asset Management. "We remain disappointed that the chief executive received very close to the maximum possible bonus in a year when overall financial performance was weak.

"While the board did exercise some discretion in reducing the awards, we believe they could have done more."

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Standard Life Investments, on the other hand, had its concerns about reappointing EY as auditors, revealing in a statement that it voted against this resolution. Standard Life voiced its concerns that the Big Four firm also played a critical role in the audit of BG Group, which was takeover by Shell in February.

However, some shareholders were more relaxed about what was on offer, with the pay resolution being passed by 85.8 per cent of those who voted, who accounted for 50.4 per cent of the issued share capital. Meanwhile, 92.5 per cent voted to reappoint the auditors and 99.8 per cent voted to approve the remuneration of the auditor.

Royal London Asset Management was not all doom and gloom on Shell's performance, with Hamilton Claxton adding:

We do acknowledge that despite a tough operating year, the company has had several successes in 2015, including the completion of the BG Group deal. We also appreciate that Shell has made very positive steps in responding to the concerns raised by its investors and we will be engaging with the company going forward.

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Royal Dutch Shell's annual report entitled chief executive Ben van Beurden to total remuneration of €5.6m (£4m) for his efforts in the year ended 2015, including an annual bonus of €3.5m.

This AGM season has seen numerous shareholder revolts, with Bob Dudley's pay receiving the thumbs down from investors at BP and Weir Group being forced to revert to an old pay policy after shareholders rejected its new proposals. 

However, other meetings have been a more relaxed affair, with pay resolutions being passed with relative ease at the likes of Lloyds Banking Group and Rolls Royce.