Sir Peter Job under fire over executive pay at Shell

Angry investors are calling for his head, The Sunday Times reported. Shareholders think the removal of Job should be the first step in the shake-up of a boardroom criticised as being out of touch.

The changes are being demanded after a decision to pay £3.65 million in bonuses to executives despite missing performance targets. As head of the remuneration committee, Job waved the payments through, the newspaper said.

“He should go,” it quoted a top institutional investor as saying. “He’s been there too long. He’s clearly not in tune with the mood of investors.”

US fund Franklin Mutual called Job's bonus decision “pathetic”.

“Many shareholders were already upset after Job sent a letter to investors before the vote to explain the committee’s position. One investor described the letter, seen by The Sunday Times, as ‘tone-deaf’. In it Job referred to the pay row as ‘an irritant’ and argued that the company had ‘already gone a long way towards meeting shareholder concerns’.

“The investor said: ‘It was the tone of it. It gave the impression that they are living in a world of their own.’”

Job has been a non-executive director at Shell since 2001. He has chaired the remuneration committee since 2007.

The bonus plan was based on Shell’s three-year share performance relative to a group of rival firms. It finished fourth, meaning executives were entitled to nothing. Because the difference between the next closest rival, France’s Total, was considered marginal – less than two per cent – Job waved through payments equal to 50 per cent of base salary. It was the second consecutive year he had approved pay-outs despite Shell’s underperformance.

The decision enraged investors - nearly 60 per cent voted down the remuneration report - but the vote is not binding. Shell and Job declined to comment.

The Sunday Times’ sister paper The Times said on Saturday that Job should have seen it coming. “...the former Reuters journalist and much-travelled non-executive, has been through a couple of bruising battles before over allegations of overly generous executive pay.

“But Sir Peter blundered into the minefield again as chairman of the remuneration committee at Royal Dutch Shell, which decided that performance targets previously set should be ignored and that some of the money should be paid regardless.”

The Times noted that Job had been involved in similar controversies when he was a non-executive director of GlaxoSmithKline and Schroders.

“Sir Peter, who turns 68 in July, is an improbable facilitator for fat cats, being a workaday journalist made good. He grew up in Devon and joined Reuters' graduate trainee programme.

“This is regarded as one of the key launches for a glittering career in journalism and, after joining in 1969, Sir Peter became a correspondent in Paris, New Delhi, Kuala Lumpur, Jakarta and, as manager, Buenos Aires before taking over the Asian operation in 1978.

“Described variously by some former colleagues as ‘prickly’ and ‘intellectually self-assured’, he became chief executive in 1991. He is the last journalist to run the news operation founded by Paul Julius Reuter in 1851.

“Under Sir Peter, Reuters widened its range of products for financial markets but was criticised for being slow to use the internet by comparison with rivals. Sir Peter was wrong-footed in 1999 when remarks he made were taken to mean that the company had no online strategy whatsoever - he later admitted he had given journalists a ‘dilatory answer’ - and the share price plunged.

“‘The internet was purpose-built for it [Reuters],’ said a former colleague yesterday. ‘He let Reuters not engage - he let Bloomberg dominate.’”

The Times summed up Job’s “Ups and downs” as follows:

Background: Studied languages at Exeter College, Oxford; Reuters trainee, then a number of foreign postings

Best break: Becoming chief executive, 1991

Worst break: Apparent fumble over Reuters' internet strategy, which sent the share price into a tailspin

Style: Self-assured, prickly, aloof. ■