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Shell, Statoil and XTO Mark Day of Shareholder Revolt

Shareholder rebellion was in the air this week. And while not all were successful, the sheer number reveals just how emboldened and peeved investors have become over hefty bonuses and compensation packages awarded to executives who have failed to meet expectations.

Royal Dutch Shell took the biggest hit. It's shareholders actually managed a victory, albeit a symbolic one, when nearly 60 percent voted against Shell's pay deal. The controversial pay package awarded bonuses to senior executives even though the company failed to meet performance targets. CEO Jeroen van der Veer's compensation rose 58 percent from 2007, while Shell finished third in a peer group of five companies.

The vote was advisory and Shell will probably tuck in its tail and take it under advisement. The defeat was still remarkable considering how rare shareholder revolts are in the U.K. The only other major shareholder protest was in 2003 against GlaxoSmithKline's pay deals for executives.

Here's where one valuable lesson for Shell lies. Next time you're looking for someone to chair your remuneration committee, don't pick the guy who was in charge of GlaxoSmithKline's executive pay package. Sir Peter Job, chairman of Shell's remuneration committee, also helped decide pay and bonuses at GSK.

Meanwhile, two other shareholder-rebellions were underway -- protests over 'golden coffins' at XTO Energy and a Greenpeace-led effort to pressure Statoil to withdraw from its Canadian oil sands project.

Neither effort was successful. Still, it marks the increasing level of activism among shareholder groups. And there are more to come in the next few weeks.

Exxon's activist shareholders will try once again to capture enough votes calling for an independent board chair and a greater emphasis on renewable energy. This time around, shareholders have launched an effort to pressure mutual funds that invest in Exxon. The group has a Web site, exxonmutualfundshares.org, that allows shareholders to send their pleas directly to their mutual funds. The mutual funds are expected to vote on the proxy resolutions before the May 27 annual meeting.

Then there's Chesapeake and the controversy over its $112.5 million compensation package for CEO Aubrey McClendon, which BNET discussed in a previous post. Shareholder fury is already building in anticipation for the June 12 annual meeting.

Here's the bad-news kicker for major energy companies facing shareholder protests. It really doesn't matter if they're successful. If shareholders can muster a respectable percentage of votes -- and in Exxon's case simply garner more than it has in the past -- it will put these companies and their bottom lines under the microscope, where everyone will take a closer look.

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