Royal Dutch Shell Group .com

Daily Telegraph: They're trying to prise Shell open but its likely to simply clam up


17 June 04


We don't know what goes on in Shell board meetings, and the company reckons it's none of our business anyway. Yesterday's, though, should have been a cracker. With copies of the White Knight letter in front of them, it must have finally dawned on the directors that they could not, after all, go on treating the shareholders as irritants in the way of running the business.


The letter, fired across the Atlantic to the FT, is signed by Ted White and Eric Knight, representing two big funds with shares in Shell, and merely asks the company to tell the shareholders something useful at the annual meeting a week on Monday.


They are not asking for inside information, merely to be told who is carrying out Shell's promised re-examination of the board and management structures and what are the terms of reference of the review. This is routine enough for most sensible boards in difficulties, but it's revolutionary for the closed world of Shell's management.


The company now employs two outside PR consultancies to complement its internal team - surely a sign of corporate stress - and it has, reluctantly, promised to say something sensible ahead of the meeting. This is a giant step for Shellkind. It could even be a giant step for the big institutional shareholders.


Annual meetings are traditionally silly set-pieces, where a couple of eccentric private shareholders are given patronising answers by a chairman on a remote dais. This one could be different. The voting will hardly matter, since the guilty men have already gone, and the double-headed structure with Royal Dutch effectively makes Shell bid-proof (as if its size was not protection enough).


There is scope for a genuine debate, with meaningful contributions both from shareholders and the directors. What sort of management structure is appropriate for a big company which needs to respond quickly? How can the interests of the company and the shareholders be better aligned? Has the Royal Dutch/Shell arrangement reached the end of its useful life?


This week Sir Richard Sykes called for a holistic approach to restoring trust in savings and investments. No company has a broader base of shareholders, direct and indirect, than Shell, so this meeting provides an ideal opportunity for both sides to practise what he's preaching. Don't hold your breath.

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