Salaries of most of the employees of the oil giant Royal Dutch Shell Plc will not be raised for the current year, said reports quoting information from sources with knowledge of the matter. According to the sources this decision was taken by the company as a part of its broader strategy of the oil and energy giant to recue costs, save cash and implement an overhaul in the company.
The company will give out annual bonuses to traders but others will not be given any.
The company had previously advised its employees to have low expectations for rise in their salary, most of the employees in fact will not get any pay hike at all this year, said Chief Executive Officer Ben van Beurden in a note to staff.
The company is currently poised to implement one of the largest organization wide reorganization in its history with it shifting from a company structure that has been in place for a century, with a priority on oil and gas production, towards a focus on production of greener energy. This restructuring will also involve loss of jobs of as many as 9,000 employees of the company within the next couple of years even as the company has already announced job cuts in the Netherlands, the United Kingdom and Malaysia. Van Beurden said last week that the company is also in the process of implementing a second round of voluntary redundancies.
Reports quoted sources who quoted Van Beurden saying that no one in the company would be receiving any bonus payments thus year. The company would be able to save as much as bonus payments from the halting of bonus payouts, company’s Chief Financial Officer Jessica Uhl told analysts in July last year.
Reports however confirmed, quoting source information, that bonuses will however be given to the traders of Shell since such payment is not related to the payout budgets related with the performance of the company.
During the second quarter of last year, its best quarterly performance on record was reported for the trading unit of the company – which is one of the largest in the world. Bonuses for traders, which can often be hefty, was not mentioned in Van Beurden’s note, said reports.
No comment on the reports was available from Shell.
The impact of the Covid-19 pandemic continued to put pressure on the company’s fuel sales and refining margins which forced the Anglo-Dutch oil giant to report disappointing end-of-year earnings.
Oil and gas companies have been pushed to move towards cleaner energy projects because of the pressure on them to run greener. However such green project typically offer lower returns compared to the traditional oil business. That is forcing oil and gas companies to put a tight leash on costs and expenditure.
Shell will however still continue to give out dividends to its shareholders. The commitment of the company to raise dividends by about 4 per cent every year was reiterated by the company in a statement form the company that outlined it’s energy transition path.
(Adapted from AlJazeera.com)