Former Shell chairman gets £1m severance package

The Shell chairman who stepped down after revealing the company's oil reserves had been over-stated has been handed a golden goodbye in excess of £1 million.

Sir Philip Watts’ severance payment consisted of a lump sum payment of £1,057,971.

This amount was based on his salary as an employee until his normal retirement date in June 2005, the company said.

Sir Philip received no performance-related annual bonus in respect of 2003 or 2004, and he forfeited various stock options and share grants. No Director’s fees are being paid for this period, Shell said.

All 232,500 of the performance-linked stock options granted to Sir Philip in March 2001 have lapsed; and the 427,872 shares granted to Sir Philip in August 2003 under the Long Term Incentive Plan were forfeited.

The exercise term of Sir Philip’s remaining 2,847,000 stock options has been shortened, so that they expire five years after his resignation, on 2 March 2009, or earlier if the original expiry date was prior to 2 March 2009.

This adjustment is consistent with the Group’s general practice of allowing employees to continue to hold options after leaving employment by mutual agreement, he said.

Sir Philip has the legal right to a pension of £584,070 per annum under the Shell pension scheme to which he has contributed over the past 35 years.

(gmcg)