It’s time for shareholders to rethink pay packages that encourage senior executives at Shell and BP to drill for oil instead of investing in clean energy, states a report this week by UK campaign group ShareAction.
The organization is arguing that “investors in the oil companies should use binding votes on pay policies next year to scrap short-term targets and reward chief executives for working towards the target set in Paris last December to limit global temperature increases to 2°C or less,” The Guardian reports.
Under rules introduced in 2013, large companies “face binding shareholder votes on three-year pay policies at next year’s annual general meetings,” the paper notes. “Persisting with pay plans that reward old measures of success risk Shell and BP becoming obsolete and ultimately going bust, the report says.”
ShareAction CEO Catherine Howarth stressed that “responsible investors who are serious about climate risk have a crucial opportunity to ‘walk the talk’ at BP and Shell next year by pushing for remuneration policies designed make these companies commercially resilient in a low-carbon world—and voting down policies which fail that test.”.
The report notes that bonuses to Shell and BP CEOs Ben Van Beurden and Bob Dudley “were largely tied to shareholder returns, project delivery, replacement of reserves, and measures that encourage oil extraction,” The Guardian notes. “Long-term bonuses were paid after a few years, yet the effects of Van Beurden and Dudley’s decisions lasted for decades.”