FTSE-100 oil giant Shell is close to unveiling a revised boardroom pay policy that will see its boss given an annual pay boost worth several million pounds.
Sky News has learned that Shell has concluded a consultation with its biggest shareholders, which could result in CEO Wael Sawan earning at least £4.5 million more each year.
Shell, which will report fourth-quarter and full-year results on Thursday, has drawn up a plan to give Mr Savan long-term incentive stock awards worth up to nine times his base salary of £1.535m, investor sources said.
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This will be a 50 per cent increase on the existing remuneration policy, under which Shell chiefs are eligible for LTIP awards of up to six times their salary.
Although the target award is quite low, given years of significant outperformance, this would mean Mr. Savan would be given an annual long-term stock award of £13.815 million – assuming his pay remains stable at the current level.
The addition of an annual bonus of up to £3.837 million or 250% of his salary, excluding pension contributions, will take his total pay package to £19.2 million.
This would rank among the largest such payout deals for the FTSE 100, although as a continuing fixture among the London Stock Exchange’s largest companies, institutional shareholders have generally expressed support for the move.
One said they supported the Shell board’s move as long as there was “clear evidence of pay for performance.”.
The revamp of Shell’s pay policy comes during a period when FTSE 100 boards are seeking permission to increase their CEOs’ pay amid concerns they risk losing executives to US-based rivals.
There have also been a series of companies, led by gambling conglomerate Flutter Entertainment, that have moved their primary listings to New York with the aim of achieving higher valuations.
This week, shares of pharmaceutical giant AstraZeneca began trading in the US.
Sky News recently revealed plans drawn up by Rolls-Royce to significantly increase the potential pay package of Chief Executive Tufan Erginbilgic after overseeing a spectacular turnaround of the aircraft engine maker.
Shell has a market value of just over £158bn, still well below US rivals ExxonMobil and Chevron.
Last year, Mr Savan was paid £8.6m, while chief financial officer Sinead Gorman received a package of £7.25m.
On Wednesday, Shell’s London-listed shares were trading at around 2833p.
They are up about 6% from last year.
In June, the company denied a Wall Street Journal report that it was in talks to buy troubled British rival BP, with Mr Savan saying he saw more value in buying back his own company’s stock.
In response to Sky News enquiries, a Shell spokesperson said, “Every three years, Shell seeks shareholder approval for a new executive director remuneration policy as a standard part of the rules for UK-listed companies.
“The last vote was in 2023, so this is part of the normal cycle.”
The company declined to comment on details of its new pay policy.
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The new plans will be presented in its annual report next month, a source said.
