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The Scotsman: Troubled Shell's board bonuses axed

 

MARTIN FLANAGAN CITY EDITOR

Sat 29 May 2004

 

STORM-tossed Shell, the subject of regulatory investigations on both sides of the Atlantic for the overstated oil reserves scandal, dispensed with annual bonuses last year as a result, it emerged yesterday.

 

The British/Dutch oil giantís twin annual reports released yesterday, after months of delay in the wake of the reserves overstatement, also showed that two of the three directors who were sacked had no contractual right to a severance payoff.

 

Sir Philip Watts, former chairman, and the companyís leading executive until he was fired in March, got a basic salary of £843,000, up 13 per cent from £745,969 in 2002.

 

However, as first proposed in March while controversy over his part in reserves overbookings still raged, he did not get a bonus that would have been worth a similar amount.

 

The company also said Sir Philip was not entitled to 50 per cent of stock options granted in 2001 as the company had not met performance targets.

 

And Shellís failure to outperform rivals such as BP and ChevronTexaco meant he also missed out on shares worth £1.7 million under the groupís incentive plan.

 

New chairman Jeroen van der Veer, a director of the Royal Dutch arm, also went without a bonus that would have been worth more than 1.2m (£800,000).

 

Two other sacked executives, Walter van de Vijver, head of exploration and production, the division where the reserves overstatement occurred, and finance director Judy Boynton, missed out on bonuses of about £600,000 and £400,000 respectively.

 

Paul Skinner, who retired in September, went without a £600,000 payoff, while Rob Routs, an executive survivor as head of chemicals and refining and marketing, missed getting about 400,000 (£267,000).

 

Malcolm Brinded, elevated to the top board in 2002 and now head of the core oil and gas division, saw his pay more than double to 800,000 (£534,000) but he also received no bonus.

 

Shell said the decision not to pay bonuses was made by Shellís remuneration and succession review committee. The directors did, nevertheless, receive share options allowed them under their contracts.

 

Recent newspaper reports said that Sir Philip was negotiating a payoff after his abrupt dismissal, but the annual reports revealed that the company had no contractual obligation to pay him or Van de Vijver anything.

 

"There were no predetermined termination compensation arrangements in place," they said of both directors.

 

The annual reports also included a detailed explanation of Shellís new, tighter reserves bookings policy.

 

It confirmed that revised booked proven reserves as at the end of 2002 now stand at 14.87 billion barrels, while revised booked proven reserves for the end of 2003 stand at 14.35 billion barrels.

 

http://business.scotsman.com/index.cfm?id=610912004

 

 

 


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