Managers are still filling their pockets at Shell and it’s a scandal, writes Philip Willems in Elsevier.
Jeroen van der Veer, the former CEO of Shell, can keep his unearned bonus for 2008. That is a scandal, for more than one reason.
During the Shell shareholders meeting this week, a majority voted against the rewards. But that does not change much. Shell’s supervisory board does not have to take the vote into account at all.
They can, according to Shell rules, reward unique performance. And it is they who decide what a unique performance is.
The rewards for the top dogs, including former boss Jeroen van der Veer, are coupled to the company’s performance. They did not reach their 2008 target and so you would think they would forfeit their bonus.
But the supervisory board gave it to them anyway. Van der Veer and his cronies almost reached their target and that was good enough, they said.
Shareholders approved the rewards policy a few years ago. As a result, they can say what they think about the bonuses, but they don’t have any control over them.
The only thing shareholders can do to stop bonuses being paid is to refuse to discharge the board from liability and send its members home. Of course, they won’t do that. It would destablise the company and ultimately end up costing a lot more.
Shell’s supervisory board, under the leadership of former Nokia boss Jorma Ollila, knows this, and calmly goes about using the rules as it sees fit. Last year Van der Veer got a bonus he did not deserve as well.
This filling of pockets at Shell is a scandal. But alas, the company is not alone. The reward strategy at most big companbies allows supervisory boards to go about their business without any interference.
But as the biggest bourse listed company in the Netherlands, Shell should be setting an example. Its executives are sending out the wrong message. And that means that executives and supervisory board members who do take the bonus system seriously fall under suspicion as well.
Philip Willems is a journalist with Elsevier magazine. This is an unofficial translation.
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