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Shell plans more cuts to costs and spending but hands CEO bigger bonus Shell plans more cuts to costs and spending but hands CEO bigger bonus
(about 8 hours later)
Increase in pay package comes despite fall in profits and as oil company watered down pledge to cut emissions Increase in pay package comes despite fall in profits and as oil company waters down pledge to cut emissions
The oil company Shell has revealed plans to ramp up cost savings and cut spending, as it handed its chief executive an increase to his pay package which angered environmental campaigners. The oil company Shell has revealed plans to hand bigger payouts to its chief executive and shareholders – by pumping more oil and gas and halving its green spending.
The pay package for the energy company’s chief executive, Wael Sawan, rose by 8.5% last year, to £8.6m, according to its annual report, released on Tuesday. The payout was labelled “obscene” by green campaigners. Europe’s largest oil and gas producer will hand its chief executive, Wael Sawan, a package worth £8.6m for last year, from £7.9m in 2023. The pay hike, labelled “obscene” by green campaigners, was awarded after Sawan scrapped Shell’s green targets in favour of a renewed focus on fossil fuels.
Separately, the company told investors before its capital market day event that it aimed to strip out a cumulative $5bn to $7bn (£3.9bn to £5.4bn) a year by the end of 2028. Sawan told investors he planned to increase Shell’s oil and gas production by 1% a year until 2030, in contrast with a previous target of letting oil production decline by 1-2% a year by 2030 compared with its production in 2019.
The target was up from the previous aim for $2bn to $3bn by the end of 2025. He also planned to increase its liquefied natural gas (LNG) business by 4-5% a year through to 2030, despite warnings that global carbon emissions would need to fall by 45% by the end of the decade to keep the world on track with internationally agreed climate targets.
It will also lower its spending to $20bn to $22bn a year over the next three years. Shell plans to grow its business even as it shrinks spending to keep costs low. The plans include cutting its scheduled investment in low-carbon energy from 20% of its capital expenditure to 10% by 2030.
In its plan, the company said it would spend 10% of its budget on lower carbon businesses by the end of the decade, having last year significantly watered down its climate pledges. Sawan’s decision to redouble Shell’s efforts on producing fossil fuels, while watering down its green targets and cutting its costs has helped its share price outpace rivals in recent years.
The company dropped a plan to reduce net carbon intensity by 45% by 2035 and instead said it would aims for a 100% reduction by 2050. Shell plans to shower its shareholders with larger paydays after setting out plans to pay out 40-50% of the cashflow from its operations, up from a previous target of 30-40%.
Sawan’s pay rose from £7.9m in 2023, because of increased bonus payments such as through its long-term incentive plan. “It comes down to confidence,” Sawan told investors at the company’s capital markets day in New York. “Confidence that through performance, discipline and simplification we will deliver what we say. Confidence that we are strongly positioning Shell for the future, resilient irrespective of how the energy system evolves.”
The increase came despite a fall in Shell’s profits last year – the oil major posted adjusted earnings of $23.7bn last year, down from $28.25bn in 2023. Sawan said last year that if his plan to revive Shell’s fortunes by focusing its spending on fossil fuels failed he would consider “all options” to catch up with highly valued rivals in the US, including shifting the company’s listing to New York.
Under Sawan’s leadership, Shell has been criticised for watering down its pledge to cut carbon emissions, and also cut hundreds of jobs at its low-carbon division. The company plans to strip out a cumulative $5bn-$7bn (£3.9bn-£5.4bn) a year in costs by the end of 2028, and lower its spending to $20bn-$22bn a year over the next three years.
Patrick Galey, the investigations lead at Global Witness, said: “After a year of uncharted climate extremes and huge energy bills, which are set to spike again in many countries this year, Wael Sawan’s obscene pay packet will feel like a slap in the face for millions.
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“It’s maddening to know that big oil bosses like Sawan are raking it in, as they double down on the oil and gas that’s fuelling climate devastation, and continue to profit from an energy crisis that’s leaving so many of us poorer.” Under Sawan’s leadership, Shell has been criticised for watering down its pledge to cut carbon emissions, and has cut hundreds of jobs at its low-carbon division.
He added: “We shouldn’t have to witness another year of corporate greed at the expense of people and planet – it’s time governments held big oil firms like Shell to account. Instead of allowing oil giants to hand out billions to wealthy shareholders and shower their bosses with lavish paychecks, governments should be making them pay climate damages.” Patrick Galey, the investigations lead at Global Witness, said Sawan’s “obscene” pay packet “will feel like a slap in the face for millions”.
The FTSE 100 company told shareholders it would aim to increase investor returns through share buy-backs and dividends payouts. “Instead of allowing oil giants to hand out billions to wealthy shareholders and shower their bosses with lavish pay cheques, governments should be making them pay climate damages,” he said.
Shell also handed $8.7bn to its shareholders through dividends last year, and spent $13.9bn on share buy-backs. It is to stick with its goal of raising dividends by 4% a year. Shell handed $8.7bn to its shareholders through dividends last year, and spent $13.9bn on share buy-backs. It is to stick with its goal of raising dividends by 4% a year.
Its emissions were largely unchanged last year at about 1.2bn metric tonnes of CO2 equivalent, according to its annual report published on Tuesday. Its Scope 3 emissions – from using the fuel it sells – reached 1.1bn tonnes, more than double the emissions produced by the whole of Great Britain.