The Times: Shell withholds bonuses from ousted directors

By Ingrid Mansell

May 29, 2004  

SHELL yesterday sought to assuage shareholder anger over its reserves misreporting scandal by revealing that it had withheld more than £2.5 million worth of bonuses from its ousted senior directors.

The Anglo-Dutch oil major said Sir Philip Watts, the former chairman, and Walter van de Vijver, the exploration chief, had missed out on potential bonuses worth £843,021 and £563,000 respectively. Sir Philip also failed to qualify for £752,000 worth of long-term incentives.  

The two men were removed in March after being blamed for the misreporting of more than 20 per cent of Shell’s oil and gas reserves. Judy Boynton, who resigned in April as chief financial officer, also missed out on a bonus worth £381,833.

Despite losing their bonuses, Sir Philip and Mr Van de Vijver both received substantial pay rises. The chairman’s salary increased 13 per cent, while Mr Van de Vijver’s pay jumped 15 per cent.

Shell remained guarded about the details of the payoffs the men would receive, despite acknowledging that it needed to “rebuild trust and credibility” after the reserves crisis.

A spokesman said severance deals for Sir Philip, Mr Van de Vijver and Ms Boynton were still being thrashed out. “The severance arrangements are still under discussion between the relevant parties. Once we have reached final agreement and obtained clearance we will provide full disclosure.” The spokesman could not say whether the payments would be finalised before Shell’s annual meeting on June 28.

According to the company’s 2003 annual report, published yesterday after a ten-week delay, Sir Philip received a base salary last year of £843,000 but did not receive a similar amount in the form of a bonus. In 2002, Sir Philip earned an £874,000 bonus on a base salary of £746,000.

While the former chairman’s pension pot also ballooned by £2.1 million to more than £10 million last year, he missed out on £752,000 of long-term incentives and did not receive 232,500 stock options because of Shell’s underperforming share price.

Ms Boynton, who earned a base salary of £381,833 last year, and Mr Van de Vijver, whose base salary was €842,500 (£562,000), both received long-term incentives and full quotas of stock options.

In a damning 463-page report into the behaviour of Shell’s top directors, released last month, Sir Philip and Mr Van de Vijver appeared to have repeatedly lied to shareholders about the value of the company’s oil and gas reserves. In one e-mail, Mr Van de Vijver told Sir Philip: “I am becoming sick and tired about lying about the extent of our reserves.”

A source close to the company confirmed that Shell would review its executive remuneration policy.

The annual report showed that Shell’s full-year net profits rose 28.5 per cent to $12.5 billion (£6.8 billion), compared with the previous year’s restated results.

WHAT THEY WOULD HAVE GOT . . .

Sir Philip Watts: salary of £843,021; bonus up to £843,021; performance shares worth £752,498; 3.17 million stock options (expiry dates ranging up to 2013); 124,327 bonus shares; pension contribution of £568,400.

Walter van de Vijver: salary of €842,500; bonus up to €842,500; performance shares worth €773,999; 302,000 stock options (expiry dates ranging up to 2013); pension contribution of €375,000.

Judy Boynton: salary of £381,833; bonus up to £381,833; performance shares worth £468,650; 210,500 stock options (expiry dates ranging up to 2013); pension contribution worth £53,130.

WHAT THEY ACTUALLY GOT

Sir Philip Watts: received salary of £843,021; 2.93 million stock options (expiry dates shortened to 2009); 79,967 bonus shares; pension contribution of £568,400.

Walter van de Vijver: received salary of €842,500; performance shares worth €773,999; 302,000 stock options (expiry dates ranging up to 2013); pension contribution of €375,000.

Judy Boynton: salary of £381,833; performance shares worth £468,650; 210,500 stock options (expiry dates ranging to 2013), pension contribution worth £53,130.