) on Mar. 3 was a humbling end to what had been a stellar career at the top of the global oil business. Watts resigned at the request of his board after Shell announced on Jan. 9 that it was downgrading the amount of oil and gas it could produce by about 4 billion barrels, or 20%.
Watts seems to have brought about his own downfall. Much of the overbooking of those proven oil reserves occurred from 1997 to mid-2001, when he was exploration and production chief. A Mar. 31 study by New York law firm Davis, Polk & Wardwell revealed that almost from the time Walter van der Vijver succeeded Watts in that role, he had complained to his boss about "aggressive" or "premature" bookings during Watts's tenure. Watts didn't call for the investigation that uncovered the problem until late 2003. The news triggered investigations by the Securities & Exchange Commission and other regulators. Shell says that it has an agreement in principle with the SEC to pay $120 million and to spend $5 million on compliance. Watts has denied any wrongdoing.
The imbroglio triggered a shakeup of management and governance. Not only was Watts replaced by Jeroen van der Veer as CEO, but van der Vijver and Chief Financial Officer Judith Boynton both lost their jobs (Boynton remains a Shell employee). On Oct. 28, Shell said that it will scrap its unusual dual-company structure. Critics say that it had made Shell too slow-footed to match the moves of its rivals. But it took a crisis to force the change.