Daily Telegraph: Sacked Shell boss walks away with £1m: “despite his role in the oil giant's reserves debacle”
By David Litterick (Filed: 26/06/2004)
Sir Philip Watts: huge payout despite failure on reserves
Sir Philip Watts was paid more than £1m compensation from Shell despite his role in the oil giant's reserves debacle.
The former chairman has been paid a lump sum of £1,057,971, which the company said was based on the amount he could expect to receive if he had stayed in his job until his normal retirement date of June 2005.
Sir Philip received an annual salary of £800,000 when he was forced to resign in March after Shell's announcement that it had overstated its proven oil reserves by 20pc - the equivalent of 3.9billion barrels.
At the time, Sir Philip admitted that the revelation was embarrassing. It was later revealed that Sir Philip, Shell's former head of exploration and production, along with other managing directors, had known for years about the true level of the group's reserves.
Shell said in March that Sir Philip had resigned in response to the board's wish for "a change of leadership due to a loss of confidence".
A Shell spokesman said yesterday that the board had decided the severance payment was appropriate on the basis of the company's "core value of respect for people, with regard to Sir Philip's longevity of service".
Sir Philip is also entitled to a pension of £584,070 a year. The size of the payout - equivalent to 15 months' salary - is likely to dismay investors, as Sir Philip's notice period, according to Shell's annual report, was just three months.
Shell said it had yet to decide on severance terms for another sacked executive, exploration and production chief Walter van de Vijver. The third boardroom scalp of the scandal, finance director Judy Boynton, still works for Shell as a consultant.
The company also made clear that the payoff for Sir Philip did not preclude future legal action against the former chairman. "We cannot speculate on the outcome and implications of external investigations," a spokesman said, referring to inquiries now underway by the US Securities and Exchange Commission and Department of Justice.
Shell also faces a class action lawsuit in the US, which accuses 27 current and former directors of breach of fiduciary duty, abuse of control, mismanagement, fraud and unjust enrichment. For the first time, auditors KPMG and Price Waterhouse Coopers are also named in the action, led by two US pension funds.
Shell has taken steps to boost investor confidence, including launching an internal review of its structure and governance. However, Monday's annual meeting, delayed after the reserves downgrades, could prove to be a stormy affair.
Two of the group's major investors have ratcheted up the pressure, calling for investor representatives to be included on a committee reviewing Shell's governance and structure. California pension fund Calpers and US asset manager Knight Vinke have sent a letter to the Anglo-Dutch group expressing concern about the "transparency and impartiality" of the review process.
Shell said it was talking to its shareholders but said it would be some time before any new proposals were put forward.