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Sick of all the brouhaha going on over executive pay on Wall Street and reading about how much Lloyd Blankfein and its counterparts made? Apparently this attempt to quiet their public enemies by reducing their own compensation is catching on. After all, someone is to blame for the crises we are in, right?
The latest executives to join the holier-than-thou "I'll reduce my paycheck to save face" are oil and gas giant Shell's CEO Peter Voser and chief financial officer Simon Henry. After missing profit targets for months last year, the company has decided to freeze its top executives' pay till 2011, and interestingly, include sustainable development as a significant part of their performance-based bonuses.
Let's be clear: They didn't just have a I-see-the-light moment. These measures are a response to their annual meeting last year where 60% of their shareholders voted against the company's pay plan, reported by Responsible Investor.com. In the future, 20% of executives' performance will be benchmarked to criteria used for the Dow Jones Sustainability Index. This is a significant move forward for the shareholders-led opposition, and for all the environmental organizations that have been protesting Shell's controversial various projects involving oil pollution. In a prepared statement, Shell's Remuneration Committee Chairman Hans Wijers said that the company wanted to "demonstrate appropriate restraint in the current economic environment" and increase "alignment between executive and shareholder interests."
Restraint or not, this should prove as a good example for other oil companies to emulate and move their sustainability efforts in top gear, which is almost impossible to achieve without involving stakeholders. For sure, all eyes will be on Shell's annual report to see how much of a dent (?) the stated 20% makes and how much of what the company reports as an increase in sustainability efforts ends up being greenwashing.
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