£3.9bn hole in Shell pension pot

OIL giant Royal Dutch/Shell today revealed a gaping $6.1bn (£3.9bn) hole in its pension pot. Falling stock markets and an acquisition spree saw the value of the group's pension funds fall by $10.3bn in 2002 from a surplus of $4.2bn.

A spokesman played down the scale of the shortfall but said it was clear the group's 'pension holiday' was over. He said: 'We have a long-term policy regarding pensions and we enjoy relatively well-funded and robust pension scheme arrangements.

'The current market conditions have been extraordinary and the past period of pension holidays and rising asset values has no doubt ended. But the scale of the funds relative to the group's is not especially large, at 25% of our market capitalisation, and given our strong balance sheet.'

More than $3bn of the swing in the value was blamed on falling share prices. Shell also took on nearly $7bn in additional liabilities after a series of deals last year, including the £3.5bn acquisition of Enterprise Oil in April.

The oil giant employs around 110,000 people in 140 countries worldwide, roughly 30,000 more than 12 months ago.

Figures in its annual report today show chairman Sir Philip Watts took home £1.8m in wages and bonus payments last year - an 8% rise. His performance-related bonus almost doubled to £874,000, despite the 23% drop in full-year profits to $9.2bn.