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The Guardian: Former Shell director Walter van de Vijver gets £2.5m payout

The Guardian: Former Shell director gets £2.5m payout

Mark Tran

Thursday August 12, 2004

Walter van de Vijver, the former Shell director at the centre of the storm over the oil group’s overstated reserves, is to get a €3.8m (£2.5m) pay-off.

It emerged yesterday that Mr van de Vijver, ousted as head of exploration and production in March and once hailed as prospective executive chairman, will receive an immediate €1.9m severance package.

But the Dutch former executive, who has repeatedly claimed he warned his fellow board members about overbooking reserves well before the scandal broke, will get the rest in instalments and subject to strict conditions.

Shell said these included “continuing cooperation with and review by relevant authorities” – a euphemism for escaping censure and/or penalties as a result of several legal investigations by American, British and Dutch judicial and financial regulators.

The pay-off to Mr van de Vijver could trigger further shareholder unrest about Shell which was fined $120m (£65m) by the US securities and exchange commission and a further £17m by the Financial Services Authority last month for misleading the market.

He is leaving with considerably more than Sir Philip Watts, the disgraced former chairman who got just over £1m and an immediate pension of £584,070 a year as well as exercisable options on 309,000 shares – and a holding of 2.8m others.

Shell said Mr van de Vijver, who worked for the group for 25 years, was entitled to more money because of Dutch laws and regulations. He is due a pension of €385,388 a year from June 2015.

The energy group, which provoked a crisis of confidence among investors by admitting it had overstated its proven reserves by 20% in January, has imposed conditions on Mr van de Vijver’s exercise of tens of thousands of stock options.

The former executive, who was paid €868,560 in salary and benefits last year but received no bonus, will get no bonus or options for 2004. He has already seen 20,000 performance-linked options granted in 2001 lapse. A further 44,000 granted a year ago under the long-term incentive plan will lapse with no value on September 1, while half of the 75,000 granted in 2002 are subject to further performance conditions.

The group shortened the exercise term of his remaining 271,500 options – which are “under water” because of the decline in Shell’s share price – to five years. A tranche of 115,000, granted last year and exercisable from 2006, are nominally worth €400,000.

Mr van de Vijver was reprimanded with Sir Philip by an independent review into the reserves debacle which said it might date back to 1997. The group has cut its proven reserves by 23% or 4.5bn barrels.

He protests his innocence, saying he acted to improve Shell’s reporting of its reserves from when he took his last job in 2001. In an angry email to Sir Philip last November he said he was “sick and tired” of “lying” about the extent of the reserves and downward revisions because of “far too aggressive/ optimistic bookings”.

http://www.guardian.co.uk/business/story/0,,1282145,00.html

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