Report
Expert Corporate Governance Service (ECGS)
EUR 1000.00 Purchase single report

Proxy Report - 22/05/2018

During tthe year under review, the Company has been involved in litigation related to pesticide use, climate change, investments in Nigeria and an accident in Pakistan.


Item 2: Approve the Remuneration Report.

The structure is unsatisfactory. Although performance is weighted toward the long-term, the bonus exceeds guidelines, qualitative criteria exceed our limits, the severance provisions exceed guidelines and an excessive loss of office payment has been made during the year. There is overlap between the performance conditions used for the STI and LTI with cash flow from operating activites accounting for 30% of the bonus and 25 of the LTI. Actual and potential incentive pay is grossly excessive. In addition, the accrual rate used to calculate the pension contribution is not disclosed.

Item 18:

Approve share buybacks. Although FCF covered the dividend this year, we believe that Shell should prioritize debt repayment as it pays down its massive debt pile resulting from the BG acquisition.
Moreover, we are concerned by the fact that shareholders were not offered the opportunity to vote on the dividend.


Item 19: External Resolution.


Shareholders are asked to approve a shareholder proposal submitted by Follow This, a Dutch group representing shareholders that collectively hold 645,314 shares in Shell. The resolution requests that the Company set and publish targets that are aligned with the goal of the Paris Climate Agreement to limit global warming to below 2 degrees

Despite our misgivings regarding the lack of detail in the resolution, we do believe that oil majors such as Shell should play a fundamental role in promoting a low-carbon future and this starts by honoring the commitments under the Paris Agreement. Although the Company has made progress in reducing its GHG emissions in recent years, the lack of long-term targets critically undermines this process and fails to appropriately incentivize executives. Case in point is in 2017 where both Scope 1 and Scope 2 emissions increased.


We additionally find it unacceptable that Shell did not make an attempt to link investments in New Energies to executive compensation. Moreover, a target annual budget of $1-$2 billion for said investments is abysmally low considering a capital budget that can easily exceed $20 billion in a given year. Shareholders should also note that, like most of its oil major peers, Shell is not a signatory to the Science-Based Targets Initiative.


As we concluded last year, the unwillingness to set tangible reduction targets for GHG emissions makes it difficult to truly measure Shell’s progress towards transitioning to cleaner energy and alludes to the fact that its strategy to reduce its carbon footprint rests heavily on the transition towards natural gas, especially after the BG acquisition.

Underlying
Royal Dutch Shell A

Royal Dutch Shell is a holding company. Through its subsidiaries, Co. is engaged in the oil and gas industry. Co. reports its business through four segments: Integrated Gas, which engaged in the liquefaction and transportation of gas and the conversion of natural gas to liquids to provide fuels and other products; Upstream, which engaged in the exploration for and extraction of crude oil, natural gas and natural gas liquids; Downstream, which engaged in oil products and chemicals manufacturing and marketing activities; and Corporate, which comprising Co.'s holdings and treasury organisation, its self-insurance activities and its headquarters and central functions.

Provider
Proxinvest
Proxinvest

Founded in 1995, Proxinvest is an independent proxy firm supporting the engagement and proxy analysis processes of investors. Proxinvest mission is to analyse corporate governance practices and resolutions proposed at general meetings of listed firms.

Proxinvest main services are :

  • ​Proxy reports
  • Definition and monitoring of client customized voting guidelines
  • Corporate Governance Data and Rating
  • Thematic research
  • Engagement support

Proxinvest has been a pioneer and champion of good corporate governance and has grown into a recognised expert in the field.

Proxinvest is independently-owned and only works for investors : Proxinvest does not provide consulting services to the companies it covers, mitigating related risks to its clients and ensuring the independence of our analysis. As a result Proxinvest is able to take a robust, independent, engaged and unconflicted view of the companies in which our clients invest.

As Managing Partner of Expert Corprate Governance Service Ltd (ECGS), Proxinvest has built a large network of corporate governance experts to support clients in corporate governance analysis worldwide. 

Analysts
Expert Corporate Governance Service (ECGS)

Other Reports on these Companies
Ahmed Ben Salem ...
  • Baptiste Lebacq
  • Charles Lepetitpas
  • Christophe Chaput
  • Christophe-Raphaël Ganet
  • Hela Zarrouk
  • Jean-François Granjon
  • Jeremy Garnier
  • Nicolas David
  • Salma Bouraoui
  • Sven Edelfelt
  • Virginie Rousseau
Ahmed Ben Salem ...
  • Alexandre Iatrides
  • Benoit Valleaux
  • Christophe-Raphaël Ganet
  • Jerôme Bodin
  • Khaled Ben Amor
  • Laurence Hofmann
  • Louis Boujard
  • Michael Foundoukidis
  • Philippe Ourpatian
  • Rémi Adam
  • Stephane Houri
  • Veysel Taze
Other Reports from Proxinvest
Other Reports from these Analysts

ResearchPool Subscriptions

Get the most out of your insights

Get in touch