Biotech Values

[DewDiligence]

What do Shell and Hemispherx have in common?

Answer: Both pay lucrative bonuses to management for crummy performance.
While HEB’s executive compensation is surreal (#msg-46604721), Shell is
emblematic of what’s wrong with compensation packages at many corporations
where attainment of performance goals are purportedly required for bonuses
to be paid, but the BoD ignores the performance shortfalls and awards bonuses
anyhow. Shell, which now vows to cease making such giveaways (see below),
has been the very definition of mediocrity in the oil patch for many years.

http://online.wsj.com/articleSB20001424052748704804204575068902954218266.html

Royal Dutch Shell PLC on Tuesday unveiled far-reaching changes to the way it rewards senior managers, less than a year after shareholders staged an unprecedented revolt against its executive-pay policies… In a letter on its Web site Tuesday, Shell said it responded to last May's vote by consulting with major investors and undertaking what it called a "wholesale review of remuneration policy." It said the proposals that resulted were designed to show "appropriate restraint in the current economic environment."

The changes address performance-based shares, distributed under Shell's long-term-incentive plan. Previously, executives were only to be awarded the shares if Shell placed in the top three of its peers in a ranking of total shareholder return, based on its share price and dividend payouts. Last year, Shell ranked fourth, but the board awarded the bonuses, anyway.

Under Tuesday's proposals, Shell's board won't apply such upward discretion for 2010 and in the future will only do so after "engaging" with shareholders [whatever that means]. Also, executives will have to hold the shares awarded under the plan for five years, and the CEO will have to own shares equivalent to three times his salary, from two times currently, to provide "greater alignment with shareholders' interests."

Additionally, annual bonuses will be linked to measures such as making sure Shell's oil and gas projects are delivered on time and on budget, rather than total shareholder return, and executive directors will have to use 25% of their bonuses to purchase shares in the company.