Shell has fuelled calls for a higher windfall tax on the sector after the oil giant revealed that its ex-boss saw his pay package soar to £9.7 million (€10.9 million) last year and is in line for further potential payouts of more than £11 million.
Former chief executive Ben van Beurden’s total pay package was up 53 per cent from 2021, as the oil group delivered a record $40 billion (€37.8 billion) in profits.
The payout follows a tumultuous year in energy markets driven by Russia’s full-scale invasion of Ukraine that led to historic earnings for the oil and gas industry as fossil fuel prices soared.
Mr van Beurden’s pay included a base salary of £1.42 million, an annual bonus of £2.59 million paid half in shares and half in cash, and almost £5 million under Shell’s long-term incentive plan, according to the company’s annual report published on Thursday.
The sum was an increase from the €7.4 million Mr van Beurden received in 2021 when the company was based in the Netherlands, but still less than the €20.14 million he was paid in 2018.
It brings Mr van Beurden’s total compensation from Shell since becoming chief executive in 2014 to more than £90 million at today’s exchange rates, according to Financial Times calculations.
Mr van Beurden – who was replaced by Wael Sawan at the start of 2023 – is also set to pick up another £2.13 million this year for advisory work and loss of office, plus a maximum possible £1.8 million pro-rata bonus dependent on company performance, as well as a potential £7.4 million in long-term awards for 2021 and 2022 share plans.
Liberal Democrat leader Sir Ed Davey condemned the pay package as “outrageous” and called for an increase in windfall taxes on the sector.
He said: “It is outrageous that oil and gas bosses are raking in millions in bonuses while families struggle to heat their homes.”
Non-governmental organisation Global Witness said Mr van Beurden’s 2022 pay package was 294 times the UK’s median salary of £33,000. Alice Harrison, fossil fuels campaign leader at Global Witness, said: “Shell’s CEO earned in one year what a typical UK worker would earn in six lifetimes.”
The NGO is urging the government to change the windfall tax on the oil and gas sector to also cover executive bonuses.
“We’re calling on the UK government to implement a people-first windfall tax in next week’s spring budget which includes executive bonuses, and to ensure a rapid transition to home-grown renewable energy sources that are cleaner and cheaper than oil and gas, and better for energy security,” Ms Harrison said.
BP is also expected to publish its annual report on Friday, which is set to reveal multimillion-pound bonuses for its boss, Bernard Looney.
The spotlight has been thrown on energy firms after a record-breaking set of annual results from the sector, which stoked controversy given the cost-of-living crisis affecting firms and businesses.
A spokesman for Shell said the former chief executive’s pay package was “considered the appropriate quantum for running a group of Shell’s scale and complexity”.
He said: “The CEO’s remuneration package is reviewed carefully on an annual basis against a range of UK and international companies, to ensure reward packages are appropriately positioned against market.”
He added: “We fully appreciate the difficulties that the cost-of-living crisis is causing many people across the world. Shell is taking steps to address it, such as doubling the hardship fund for vulnerable customers of our UK retail energy business.”
The group’s annual report also showed that Mr Sawan – Shell’s former head of gas and renewables – was appointed on a £1.4 million annual salary, in line with his predecessor, plus a potential annual bonus worth £1.75 million, or 125 per cent of salary, and long-term shares worth up to a maximum potential of £4.2 million, or 300 per cent of salary. – Copyright The Financial Times Limited 2023 / PA