Financial Times: Royal Dutch's options prompt argument

By Ian Bickerton in Amsterdam and Carola Hoyos in London

Published: May 15 2004

Royal Dutch/Shell is caught in an argument over a potential multi-million pound share bonus package granted to its chairman.

Shell is at odds with the Netherlands Authority for Financial markets (AFM), the regulator investigating the company's reserves crisis, over not registering performance-related packages granted to Jeroen van der Veer, chairman of its management committee.

Werner van Bastelaar of AFM said: "We are of the opinion that [performance-related] bonus packages should be registered with us. We are examining the facts carefully."

But Royal Dutch/Shell disputed this. Sjoerd Eisma of its long-time legal adviser, said: "It is my view that there is no legal obligation for Shell or the beneficiary to make any announcement to the Dutch regulator at this time.

"It is Dutch law that if the award is made under suspensive conditions [where the effect of the award is suspended until the condition is satisfied], the obligation to inform the regulator arises on the satisfaction of the condition." He said the rule was in AFM's official brochure, and he had inquired with the regulator whether it was still being applied.

If Shell did break AFM rules, it may find itself in trouble with the US Securities and Exchange Commission, which requires disclosure to Washington of what it discloses nationally.

Shell did disclose options of shares of Royal Dutch, the Dutch arm of the company, for Mr van der Veer and for Rob Routs, another senior executive, to AFM.

It also disclosed both the options and long-term incentive bonus of shares in the UK arm for Malcolm Brinded, head of exploration and production, to the London Stock Exchange.

But the company confirms it did not disclose the long-term performance incentive bonuses of Royal Dutch shares for Mr van der Veer and Mr Routs.

Any incentive bonuses would be paid out after three years and only if Shell's shareholder return beats its closest peers, a condition that has not yet been met.