Daily Telegraph: Shell boss to get £2.5m pay-off: “The final payment is likely to exceed 4m”: The pay-off is likely to be seen by critics as another example of "reward for failure". (ShellNews.net)
By Christopher Hope (Filed: 13/08/2004)
Walter van der Vijver, one of Shell's two senior directors who resigned after the company's reserves crisis earlier this year, has been handed a 3.8m (£2.5m) pay-off, worth four times his basic salary.
It is more than twice as much as the £1m given to Sir Philip Watts, Shell's former chairman of the committee of managing directors, who also lost his job.
The pair quit after the Anglo-Dutch group shocked investors in January by revealing that its "proven" oil and gas reserves were 20pc less than it had thought. Shell then revised the figure a further three times before concluding that it had overstated its proven reserves by 23pc - or 4.47billion barrels.
Both men left in March and were censured a month later in an independent review commissioned by Shell.
Mr Van de Vijver, who was exploration and production director, will pick up half of his severance payment immediately, with the remainder payable in stages on condition he co-operates with reviews into the crisis.
Shell said: "The amount is based on his 25 years service with the group and had it not been for this termination, the otherwise remaining years of service until normal retirement date."
The final payment is likely to exceed 4m when the value of 115,000 unexercised share options are taken into account. Shell also said that Mr Van der Vijver, 48, had "a legal right" to a deferred pension of 385,388 per year from June 2015, when he reaches retirement age.
Mr Van der Vijver will get the pay-off despite receiving a 900,000 basic salary, and being employed on a contract with three months' notice.
Investors were sanguine. Richard Singleton, head of corporate governance at fund manager Isis which controls 1pc of Shell, said: "We understand the agreement that had to be signed in the circumstances." William Claxton-Smith, director of UK equities at Insight, which also has over 1pc, said the deal was the best that could be expected under Dutch employment law.
The pay-off is likely to be seen by critics as another example of "reward for failure". Last month Shell was fined $120m (£65.5m) by the US Securities and Exchange Commission after an inquiry found it violated reporting, record keeping and anti-trust rules.
It said that agreeing to pay the fine did not mean it admitted the SEC findings or that it was free of blame.
In a further move to draw a line under the crisis, Shell agreed to pay a penalty of £17m imposed by the UK Financial Services Authority.
The investors also welcomed suggestions that a review of Shell's complicated corporate structure - it is 60-40 owned by shareholders in the Netherlands and the UK - could result in the two companies being merged.
A steering committee, which is being advised by NM Rothschild and Citigroup, was said to be looking at a more radical move than the unification of the two boards. A spokesman said: "Nothing is ruled in and nothing is ruled out. We are considering a very broad range of structures."
Writing in Shell's Midyear review, Lord Oxburgh of Liverpool, Shell's UK chairman, said: "The review is proceeding at good pace. The steering committee will continue to listen to shareholders as their work develops and plan to announce their conclusions in November."
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