Our review of remuneration policies at the 30 largest listed oil and gas companies in Europe, Asia and North America shows that:

• Reforms to align oil and gas executive compensation with the realities of the energy transition are moving at a snail’s pace. We find that 90% of companies directly reward executives for production or reserves increases in some shape or form, a figure virtually unchanged since 2017. These targets encourage a focus on size over shareholder value, exacerbating stranding risks.
• Most puzzlingly, all European companies with net zero ambitions still incentivise executives to grow oil and gas volumes to some extent, based on their disclosures to date. This includes BP, Repsol, Eni, Shell and Total. Rewarding fossil fuel growth will likely slow progress on longer-term strategic objectives around decarbonisation.
• The result is that European majors rank worse than their US counterparts in terms of using remuneration to incentivise fossil fuel growth, running counter to their stronger positioning on portfolio economics, emissions ambitions and impairment price assumptions.
• While some European companies have raised the share of pay that is determined by climate-related metrics, these targets are often inconsistent with the emissions goals set for the organisation as a whole. North American and Asia-Pacific companies have virtually no rewards for emissions reductions.
• Regardless of whether or not companies are diversifying into low-carbon industries, we encourage their shareholders to pressure management to replace direct production targets with value-focused metrics, like TSR and ROACE.