Royal Dutch Shell cut the pay of its chief executive by more than 40% in 2020 after the oil company plunged to a $20bn (£14.3bn) loss triggered by the steepest ever drop in oil demand during the Covid-19 pandemic.
Ben van Beurden’s total remuneration fell to €5.8m (£5m) last year, compared with about €10m the year before. It is the second consecutive pay cut for the chief executive after his pay packet halved in 2019.
Van Beurden was also forced to cut Shell’s dividend for the first time since the second world war, and will make staff cuts of 7,000 to 9,000 across the group’s global business as the oil and gas company grapples with the financial toll of the pandemic and the pressure to adapt to a low-carbon energy future.
Shell also announced on Thursday that its chairman, Chad Holliday, would step down after six years in the role, to be succeeded by the former BHP chief executive Andrew Mackenzie from May.
Mackenzie’s six-year tenure at BHP Billiton was defined by an ambitious turnaround programme in which the Anglo-Australian company streamlined its operations and shrugged off its interests in US shale drilling.
Mackenzie said it was “a pivotal time for the industry and wider society” and he planned to “profitably accelerate Shell’s transition into a net zero emissions energy business” that would “continue to generate substantial value for shareholders, customers and communities alike”.
The Scottish-born geologist spent 22 years at BP before moving to the mining company Rio Tinto and then BHP. He joined the Shell board in October.
Van Beurden said he was looking forward to working with Mackenzie. “We are emerging from the Covid-19 pandemic with a clear and distinct strategy that I believe will enable us to seize the opportunities presented by the energy transition. I cannot think of anyone better than Andrew to take this role,” he said.
The pandemic caused a precipitous fall in oil prices in March 2020 as traders adjusted to the prospect of far lower demand for transport fuels and a deep global recession. Shell responded by slashing its spending, lowering its oil price forecasts for the coming years, and writing down the value of its oil and gas assets by $22bn.
Van Beurden’s fixed pay was worth €2.1m, and he declined to take an annual bonus for 2020 as the value of shares slumped. However, he still received a bonus of £3.7m under his long-term incentive plan, down from £8m in 2019.
Shell’s chief financial officer, Jessica Uhl, received pay of £3.7m, including a long-term bonus of £2m.
Oil prices have recovered in the early months of 2021, in part because of dramatic production cuts but also because of hopes for the global economic recovery as Covid vaccination programmes roll out.
Brent crude oil futures were sold for more than $65 a barrel on Thursday, above the $63 levels seen at the start of 2020, before the extent of the pandemic’s impact on the global economy became clear.
p class=”css-puzfbd”>The improvement in oil prices has lifted the price of Shell’s shares, though they remain 31% below their levels at the start of 2020.