The Times: Shell faces investor revolt over chairman's £1m payoff

By Caroline Merrell

June 28, 2004  

EXECUTIVES in Shell, the oil company, expect a storm of protest today when shareholders gather for its annual meeting in London.

Investors are angry at the oil giant’s proposed £1 million payoff to Sir Philip Watts, the former chairman. They want Sir Philip to be paid only his three-month contractual entitlement.  

The £1 million payment is five times the amount the company has to pay under the terms of his contract. In addition to the payoff, Sir Philip is scheduled to receive an annual pension of £584,000.

Sir Philip was chairman when Shell was forced to restate its oil reserves. The restatement triggered a fall in the share price, prompting a series of investor lawsuits that claim the company knowingly provided misleading information to investors.

Shareholders are also expected to attack the board over its planned review of corporate governance. Friends of the Earth, the pressure group, will voice fears over the company’s environmental record.

Last week, in response to shareholder pressure, the company announced a review of corporate governance led by five senior executives.

Some shareholders believe that the review will not go far enough and are suggesting that they nominate representatives to help to carry it out.

Calpers, the giant US pension fund, is concerned that the review will not be transparent enough and that those appointed to carry it out will not be able to act objectively.

Pirc, the UK shareholder activist, is angry at Sir Philip’s proposed payoff. It wants shareholders to have power to veto payments that represent more than six months’ salary.

Shell said that Sir Philip’s three-month notice period had not been triggered because he had resigned by mutual consent. Therefore a severance agreement had to be reached.

http://business.timesonline.co.uk/article/0,,8209-1160734,00.html