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The Financial Times: Shell's ousted chiefs 'paid no bonuses' in 2003

 

By Ian Bickerton in Amsterdam and Carola Hoyos in London

Published: March 16 2004 21:53 | Last Updated: March 17 2004 11:25

 

Sir Philip Watts, Royal Dutch/Shell's ousted chairman, and Walter van de Vijver, former head of exploration and production, were paid no bonus in 2003, according to two people familiar with the contents of the oil group's annual report scheduled to be published on Friday.

 

One said: "There is a fairly high level of disclosure about remuneration, and neither Phil Watts nor Walter van de Vijver appears to have received a bonus in 2003, at least certainly not a cash bonus. The total [salary] number is quite some way lower than the 2002 number."

 

Sir Philip received 1.8m (2.6m) in 2002, more than 1m of which came in the form of bonuses. Mr van de Vijver made 1.66m, of which 902,750 was performance-related.

 

People close to Shell said most references to Sir Philip had been taken out of the report, which has gone through several re-draftings since January.

 

An introductory message from Sir Philip has been replaced with a statement by Jeroen van der Veer, who was appointed his successor on March 3. Mr van der Veer passes quickly over Shell's problems, noting only that while 2003 was a good year, the company recognises there are problems it has to tackle.

 

While detailed reference is made to Shell's reserves policy, there is no new information that might provide an insight into the progress of the audit committee team probing the matter.

 

As to any pay-offs for the departed executives, Shell repeated on Tuesday: "This is a matter for the boards of the parent companies and the individuals concerned. Shell will meet its legal obligation."

 

Those obligations include three months' notice for top executives. Shell is understood to be paying Sir Philip and Mr van de Vijver three months of their salaries.

 

It is unclear, however, whether the two former executives were the only members of the company's management committee to lose out on a bonus last year.

 

Shell's annual bonuses are based on company targets including ones associated with customers, sustainable development, and financial and operational objectives. In 2002, group managing directors received 115 per cent of their base salary.

 

Another bonus - the long-term incentive plan - was introduced last year. It depends on performance vis--vis certain competitors. The group's poor performance in 2003 means that no senior executive at Royal Dutch/Shell will receive that bonus.

 

Meanwhile, the Justice Department has opened an inquiry into whether Shell executives violated any laws by failing to disclose in a timely fashion a significant shortfall in proven reserves of oil and natural gas, according to a report in the New York Times.

 


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