Royal Dutch Shell PLC (RDSB.LN) investor Standard Life Investments Tuesday criticized the company's remuneration committee over plans to pay executives a bonus despite failing to meet performance conditions.

"As a matter of principle we don't support rewarding executives for achieving unchallenging performance conditions," said Guy Jubb, head of corporate governance at Standard Life Investments, which is part of asset manager Standard Life PLC (SL.LN), in a statement.

"This is the second year in a row that the remuneration committee has used its discretion to reward the executives for below-average returns to shareholders, which raises serious questions about whose interests they are looking after. We have voted against Shell's Remuneration Report for each of the last three years," Jubb said.

Shell awards executives shares related to the performance of the company relative to its peers. From 2006 to 2008, the company ranked fourth among its peers, which under the rules of the incentive scheme should have meant executives received no bonus.

The difference with the third-placed company, Total SA (TOT), was marginal and the remuneration committee looked at a variety of performance measures and results and concluded that the ranking "didn't reflect Shell's underlying strong performance," a company spokesman said.

Standard Life Investments is the fifth largest holder of Shell B shares with 1.92% of the float, and the 16th largest holder of A shares with 0.37%, according to FactSet data.

The Association of British Insurers, which advises insurance companies that invest in equities on corporate governance, has issued an "amber" alert on Shell's remuneration plans, and shareholders should consider if the exercise of discretion is appropriate in this case, a spokesman said.

The ABI recently issued a similar alert for BP PLC (BP), whose remuneration committee also used its discretion to award shares to executives, when the rules of its long-term incentive scheme said they should receive nothing. At BP's AGM last month, 38% of shareholders opposed the executives' 2008 pay package.

Company Web site: www.shell.com

-By James Herron, Dow Jones Newswires; +44 (0)20 7842 9317; james.herron@dowjones.com