Concrete central to South Korea's green renaissance

By Andrew Hill, Christian Oliver and Haig Simonian
Published: May 6 2009 03:00

Four wheels bad, two wheels good. Anything that can wean gas-guzzling South Korea, the world's sixth-biggest oil importer, off cars should be good news.
Shares in bicycle makers surged by the 15 per cent daily limit after Lee Myung-bak, the Korean president, vowed to promote the industry and turn the bike importer into one of the world's biggest producers.
The proposal came as part of Korea's "green new deal" in which Mr Lee envisages the country criss-crossed by 3,000km of bicycle lanes and hosting a "Tour de Korea".
However, soaring shares in asphalt makers exposed the fundamental problem with Korea's new green deal. Mr Lee is a former construction executive and likes green projects as long as they create jobs involving shovels and concrete.
Environmentalists are outraged about the construction of cycle paths and hotels down the banks of all the main rivers in Korea, destroying fragile waterway ecosystems.
Nature lovers point out that such development contravenes Korea's commitments under international accords on wetland conservation, such as the Ramsar convention. The environment ministry argues it will study any threat to endangered species but there seems little chance of stopping the asphalt.
Korea has no coherent definition of what constitutes "green" so can happily class whatever it likes, including concreting river banks, as part of its new deal.
Shell and standards
The clock indicates you came in fourth by a fraction of a second but, hey, there was a headwind, you were trying harder than the other guy and, what's more, those stopwatches are all wrongly calibrated. Have bronze, instead, with our compliments.
The decision by Royal Dutch Shell's remuneration committee to overrule its own pay policy for top executives - for the second year running - looks terrible.
But Shell is no Bellway, the UK housebuilder that last year retroactively scrapped its performance targets without consulting shareholders, earning itself a justified beating at its annual meeting. In fact, the directors on Shell's remuneration committee have done almost everything right.
They asked shareholders for the opportunity to use discretion - either in favour or against pay awards - three years ago to avoid being forced into making an anomalous award. They rightly identified that, as a performance gauge, total shareholder return - which has grown like a poorly pruned hedge at many companies, overshadowing better measures - risked distorting the outcome. They then reviewed the policy in the light of shareholder concerns and added some new relative measures for 2009. Finally, they managed all this without having to rely heavily on external compensation consultants (though Towers Perrin supplied supporting data).
That shows a reassuring independence of mind. After all, if the likes of Sir Peter Job (former chief executive of Reuters), Lord Kerr (once Britain's ambassador to the US), Deutsche Bank's Josef Ackermann and Jorma Ollila of Nokia needed their hands held, Shell really would be in a pickle.
Where, then, did they go wrong? The committee exercised its discretion twice in two years to grant shares that executives did not, under a strict interpretation of Shell's own rules, deserve, and did so without further shareholder consultation.
These are not hanging offences. Not all investors will follow the recommendations of shareholder advisory groups to rebel. Shell could further refine its procedure next year simply by scheduling a couple of days between meetings of its remuneration committee and its board meetings to flag issues to big investors. But the titans and titled folk on the committee can't complain about being called to account, if only because mere mortals at other companies look to the race leaders to set the standard.