The last time Brent traded at $60 a barrel, COVID-19 had yet to take hold, economies were open – and demand was higher.
Royal Dutch Shell Plc will not raise salaries for most of its employees this year, according to people with knowledge of the matter, as it looks to save cash amid an overhaul of the company. Traders will receive annual bonuses, while others won’t receive any.
In a note to staff, Chief Executive Officer Ben van Beurden said that while the company had previously told employees to have low expectations for salary increases, most wouldn’t get a pay rise this year.
Shell is starting one of the biggest reorganizations in its history as it pivots from a century-long structure that prioritized oil and gas production to a greener future. There will be as many as 9,000 job losses over the next two years, with cuts already announced in the Netherlands, the U.K. and Malaysia. A second round of voluntary redundancies is also underway, Van Beurden said last week.
He reiterated that there would be no bonus payments for anyone in the company, the people said. In July, Chief Financial Officer Jessica Uhl told analysts that halted bonus payouts would save the company about $1 billion.
Shell’s traders, however, will receive bonuses as it’s not tied to payout budgets associated with the company’s performance, people with knowledge of the matter said, asking not to be identified because the information is not public.
The company’s trading unit, among the biggest in the world, had its best performance on record in the second quarter of last year. Van Beurden’s note did not mention bonuses for traders, which can often be hefty.
A Shell spokesperson declined to comment.
The Anglo-Dutch oil giant reported disappointing end-of-year earnings as the impact of the coronavirus continued to hit fuel sales and refining margins. The pressure to turn greener has pushed companies toward clean-energy projects which typically have lower returns than oil. That is forcing them to keep a tight rein on expenditure.
Still, Shell will continue to reward shareholders. In a statement outlining it’s energy transition path on Thursday, the company reiterated its commitment to raise the dividend by about 4% each year. It will also start share buybacks once net debt falls to $65 billion.