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Shell boss got £10m pay package amid oil price surge

By: 
Terry Macalister - The Guardian

Energy firm reveals that chief executive's pay doubled in 2011 as it admits to 207 oil spills, up from 195 the previous year

Oil flaring in Akaraolu, Nigeria

Oil flaring in Akaraolu, Nigeria. Shell is still working to reduce the amount of gas flared off into the atmosphere in Nigeria. Photograph: Chris Hondros/Getty Images
 

Shell chief executive Peter Voser earned more than £10m last year in pay and bonuses at a time of near-record oil prices and in a year when the firm was responsible for 207 oil spills – considerably more than the year before.

The remuneration, made up of salary, bonuses and long-term incentive schemes, was more than double the figure for 2010 but the company said it was justified by Shell's strong operating and share-price performance. The oil firm reported global annual earnings of $28.6bn (£18bn) in 2011 – or more than £2m an hour – a 54% increase on the previous year.

The Anglo-Dutch group has cashed in on surging oil prices – which were more than $30 a barrel higher in 2011 than in 2010 – and booming demand for gas. It makes most of its money outside Britain and claims to generate barely 1p a litre profit from petrol sales.

Voser's £10.4m payout is composed of £4.52m in annual salary and bonus, with the balance from long-term incentive schemes. A spokeswoman said the payout "is a jump, but it's a reflection of a number of different factors and includes a payout from a share scheme that has been running for three years".

But she said the remuneration policy had not changed and she could not rule out another bumper payout next year.

Voser's pay was revealed in the company's annual report less than 24 hours after directors were criticised by British MPs for alleged complacency over safety plans for future drilling in the Arctic.

Shell said in its report that the number of "operational spills over 100 kilograms" increased to 207 during 2011 from 195 in 2010, but it admitted the figure for last year could still grow. The group is still investigating a further four spills in Nigeria that it admits "may result in adjustments to the 2011 data". A similar adjustment was made to the 2010 number.

Among the confirmed spills last year was a leak from a pipeline connected to the Gannet Alpha platform in the North Sea, plus one off the Bonga field in Nigeria. The company said that it regretted both incidents, but had taken "prompt and comprehensive response actions".

Shell is particularly vulnerable to spills in Nigeria, some of which have been caused by sabotage. Its activities were heavily criticised by a UN environment programme report last year.

The company is trying to reduce the amount of gas flared off in Nigeria into the atmosphere. But the annual report also said flaring, a major cause of greenhouse gases, would increase next year in Iraq.

Shell admitted that environmental problems it was still grappling with included 23 square kilometres of "ponds" containing toxic metals caused by the mining of tar sands at Athabasca in Alberta, Canada. It said it was still working with local authorities on what to do about the discovery of fresh water from a local aquifer in the bottom of one pond at the Muskeg River Mine, Athabasca.

Shell also admitted it has been – along with other energy companies – facing legal challenges over responsibility for carbon emissions and therefore climate change. It said in the report that the claims were "without merit".

The report also showed that Malcolm Brinded, who competed against Voser for the top job and missed out, would leave the company with a ¤2.5m (£2.1m) payoff "in line with the policy introduced in 2010". He will also get a "pro-rated" performance bonus and the company will make good on any financial loss made on a house bought in Holland when he moved there in 2002.

• This article was amended on 16 March 2012. The original headline said "Shell boss took home £10m amid oil price surge". This has been corrected.

Posted Date: 
17 March 2012