ABC.News.com: Shell Pays Former Chairman Philip Watts Nearly $2 Million in Lump Sum Severance Payment
The Associated Press
LONDON June 25, 2004 — Royal Dutch/Shell has paid former chairman Philip Watts, who resigned in the wake of the company's embarrassing overstatement of its proven oil and gas reserves, a lump sum severance payment of nearly $2 million, the company said Friday.
Watts resigned in March 2004, and his payment was based on his salary as an employee until his normal retirement date in June 2005.
When Watts resigned, the company said he did so in response to the board's wish for "a change of leadership due to a loss of confidence."
The company stunned the oil industry earlier this year when it cut its estimate of proven oil and gas reserves by 20 percent. Since then, it downgraded its reserves estimate three more times, cutting them by a total of 4.47 billion barrels, or 23 percent.
A Shell spokesman said Friday the board decided the severance payment was appropriate on the basis of the company's respect for its long-term employees.
No director's fees were paid for this period, Watts received no performance-related annual bonus for 2003 or 2004, and he forfeited some stock options and share grants, Shell said.
The exercise term of Watts' remaining 2,847,000 stock options has been shortened, so that they expire five years after his resignation, on March 2, 2009, or earlier.
In addition, Watts has the legal right to a pension of 84,070 pounds ($153,000) per annum under the Shell pension scheme, which he contributed to for 35 years.
The Royal Dutch/Shell Group of Cos. is currently considering unifying its corporate structure by uniting the management boards of its two parent companies.
It also hopes to restore investor confidence after the reserves scandal.
Shell has an unusual, bi-national structure in which Royal Dutch Petroleum Co. of the Netherlands controls 60 percent of the group and Britain's Shell Transport & Trading Co. PLC holds the remaining 40 percent.