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.
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.
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.
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.
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.
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.
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%.
“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.”
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.
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.
after newsletter promotion
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.
Patrick Galey, the investigations lead at Global Witness, said Sawan’s “obscene” pay packet “will feel like a slap in the face for millions”.
“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 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.
