The Independent: Sacked Shell chief keeps 1m options
By Michael Harrison
29 May 2004
The disgraced former chairman of Royal Dutch/Shell, Sir Philip Watts, is to be allowed to retain more than a million share options granted to him last year. He will also be entitled to a £568,000 income in retirement after a £2m increase in his pension pot last year to more than £10m.
Sir Philip's basic pay went up in 2003 by £98,000 or 13 per cent to £843,000. However, he received no annual bonus. He has also forfeited £752,000 worth of performance shares in Shell's long-term incentive plan and 232,500 share options granted in 2001 because of the company's below-average financial performance. However, the share options are worthless anyway because their exercise price is more than a pound above Shell's current market price.
Shell's 2003 annual report and accounts show that Sir Philip was awarded 1,165,000 share options during the year with an exercise price of £3.66. They are currently showing a paper profit of £326,000.
Even though Sir Philip was sacked by Shell in March over the scandal of misbooked reserves, a spokesman said he would be allowed to retain the share options because of his long service with the company. "The company's policy is that certain employees are allowed to keep their options after they leave employment to reflect the long-term nature of the business and the time lag between delivery of financial performance and the vesting of options," he added.
Sir Philip will be entitled to exercise the options any time until March 2009. The terms of his severance deal are still being negotiated and so do not appear in the report, although the spokesman dismissed reports that he is in line for a £1m pay-off.
The accounts also show that Shell's ex-finance director Judy Boynton, another casualty of the reserves scandal, is entitled to a minimum severance payment of $1m. This is because her employment contract is governed by US law. Ms Boynton, an American citizen, is due to leave Shell after its annual meeting at the end of June.
Shell's former head of exploration and production Walter van de Vijver, who was sacked with Sir Philip, saw his basic pay increase from €735,000 to €842,000. He was also awarded 115,000 share options and has performance shares with a value of €774,000, although the Royal Dutch report and accounts do not say whether these will vest.