NewsDay.com: Shell pays former executive nearly $2 million in severance: PLUS NEW "lawsuit... suggests the defendants forfeit salaries, bonuses, stock awards, profits and special benefits for violating their fiduciary duties".
LONDON (AP) _ 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 latest lawsuit related to the restatement was filed Friday in New Jersey by U.S.-based pension funds, seeking changes in the company's corporate structure.
The suit, a shareholder derivative action which seeks reimbursement to the corporation, charges that company officers violated the U.S. Sarbanes-Oxley Act by allowing the Shell Group to operate without inadequate internal controls.
It was filed in state Superior Court for Middlesex County, in New Brunswick, N.J., against executives and board members of Royal Dutch Petroleum Company and the Shell Transport & Trading Co. Also charged are their accounting and auditing firms, PricewaterhouseCoopers International and KPMG International.
The New Jersey court may have jurisdiction, because Shell has operations in the county. Lawyers for the pension funds also believe that New Jersey law provides advantages for them under Sarbanes-Oxley. Class-action lawsuits have been filed in U.S. federal courts.
The suit was filed by the UNITE National Retirement Fund, based in New York, which represents textile and laundry workers, and the Plumbers and Pipefitters National Pension Fund, based in Virginia.
The lawsuit demands a shareholder vote on combining the Royal Dutch and Shell Transport boards, as well as the right of shareholders to nominate three directors.
It also seeks unspecified monetary damages and suggests the defendants forfeit salaries, bonuses, stock awards, profits and special benefits for violating their fiduciary duties.
The lawsuit demands limits on insider stock sales and a change in how executive compensation is awarded.
A Shell spokesman in London, Andy Corrigan, said the company had not yet seen the lawsuit and does not comment on pending legal matters.
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.
Watts was chairman of the Shell Transport & Trading. Its U.S. shares were up 18 cents at $45.99 in midday trading on the New York Stock Exchange.
Copyright © 2004, The Associated Press