Oil giant Shell is preparing to implement a significant overhaul of its boardroom pay policy, which could see chief executive Wael Sawan receive a multimillion-pound annual increase in his compensation package. According to exclusive information obtained by Sky News, the FTSE-100 company has finalised consultations with its major shareholders, paving the way for a substantial boost to Sawan's earnings.
Details of the Proposed Pay Package
The revised remuneration policy would grant Sawan a long-term incentive stock award valued at up to nine times his base salary of £1.535 million. This represents a notable 50 percent increase from the current arrangement, where the CEO is eligible for an award of up to six times his salary. Under the new structure, the target award is set lower, but in years of exceptional performance, Sawan could receive an annual long-term stock award worth £13.815 million, assuming his salary remains unchanged.
Total Compensation Breakdown
In addition to the long-term incentive, Sawan is entitled to an annual bonus of up to £3.837 million, equivalent to 250 percent of his base salary. When combined, these elements would bring his total pay package, excluding pension contributions, to a maximum of £19.2 million. This figure would place Sawan among the highest-paid executives in the FTSE-100 index, reflecting Shell's status as one of London's largest listed companies.
Shareholder Support and Industry Context
Institutional shareholders have generally expressed support for the proposed changes, provided there is clear evidence linking pay to performance. One investor source emphasised that backing the move hinges on demonstrating tangible results. This pay policy revamp comes at a time when many FTSE-100 boards are seeking approval to elevate CEO pay, driven by concerns about retaining top talent amid competition from US-based rivals.
The move follows a trend of companies, such as gambling group Flutter Entertainment, shifting their primary listings to New York in pursuit of higher valuations. Recently, pharmaceutical giant AstraZeneca began trading its shares in the US, highlighting the ongoing transatlantic competition for corporate prestige and investment.
Recent Precedents and Market Position
Shell's initiative mirrors similar efforts by other major UK firms. For instance, Rolls-Royce recently unveiled plans to significantly increase the potential pay package for its chief executive, Tufan Erginbilgic, following a successful turnaround of the aircraft engine manufacturer. Shell, with a market capitalisation of just over £158 billion, remains smaller than American peers like ExxonMobil and Chevron, underscoring the pressure to remain competitive in global markets.
Last year, Sawan received total compensation of £8.6 million, while chief financial officer Sinead Gorman was awarded a package worth £7.25 million. On Wednesday, Shell's London-listed shares were trading at approximately 2833 pence, reflecting a 6 percent increase over the past year.
Company Response and Future Steps
In response to inquiries, a Shell spokesperson stated that seeking shareholder approval for a new executive director remuneration policy every three years is a standard regulatory requirement for UK-listed companies. The last vote occurred in 2023, making this part of the usual cycle. The company declined to comment on specific details of the new policy, but sources indicate that the plans will be outlined in Shell's annual report next month.
Earlier this year, Shell denied reports from the Wall Street Journal suggesting it was in talks to acquire troubled British rival BP. Sawan has previously indicated that he sees greater value in repurchasing Shell's own stock rather than pursuing large acquisitions.
