Shell Owes Pension $6 Billion, Kills Solar And Wind Projects


How quickly things turn for oil companies. Less than a year ago, the talk was about the outrage of of their windfall profits.  Now it’s about them weathering the storm.

Royal Dutch Shell (RDS) will have to pay $6 billion to fill a hole in its pension fund, reports the Financial Times, which is equal to almost 5% of the company’s market cap. Not great at time when revenue is falling on low oil prices.

The company will also cut its solar and wind operations, and does not “expect material amounts of investment in those areas going forward,” says Linda Cook, head of Shell’s gas and power unit.

Shell also hopes to increase its dividend for the year by 5%–by taking on debt.  Net debt as a portion of capital employed would jump from 6% to the low 20s by year end. S hell’s not alone among oil companies doing this: BP is also taking on debt to cover its dividend.

And since we’re all concerned about exec pay, here’s some info on that too. Though its performance in terms of shareholder returns was the worst among the leading western oil companies, it’s exces did quite well:

FT: CEO Jeroen van der Veer got $13.4 million, up 58% from 2007, via $2.5 million in salary, $4.9 million in bonus, $2 million in pension benefits, $3.5 million from a long term incentive plan. This is twice as large as the salary of BP’s CEO, Tony Hayward.

Malcolm Brinded, head of exploration and production, more than doubled his pay to $8.24 million.

Linda Cook, head of gas and power, had an 82% rise to $8.7 million.

Peter Voser, to take over as chief executive in July, had a 45% to $5.36 million.

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