Question

In May 2009, financial media reported that over 59% of shareholders of Royal Dutch Shell plc voted against the company’s 2008 executive compensation report. The objection arose because of bonuses awarded to executives even though performance targets for the 2006– 2008 period were not met.
While the vote was non- binding, Shell’s Board chairman said the Board would “reflect carefully” on the vote and would consult with major shareholders.
In September 2009, the chair of Shell’s compensation committee indicated that he would resign and leave the company. Another member resigned and moved to the audit committee.

Required
a. What are the advantages and disadvantages to the company and its shareholders of giving shareholders a non- binding say on pay?
b. Should non- binding say on pay be strengthened by making it binding on the company? Explain.



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  • CreatedSeptember 09, 2014
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