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The Daily Telegraph: Investors push for shake-up at Shell

By Christopher Hope, Business Correspondent (Filed: 07/02/2004)


Shareholders want Shell to merge its two boards and committee of managing directors into a unitary board run by a separate chairman and chief executive. 


The investors are hoping to capitalise on the crisis engulfing the company after it overestimated its proven reserves by 20pc.


Sir Philip Watts, the chairman of Shell's committee of managing directors, will meet 35pc of the company's shareholders over the next four weeks to "hear at first hand" their concerns.


A straw poll of some of its UK investors yesterday found that they wanted the company to restructure its management, preferably by the end of the year.


One fund manager said: "The whole question of how [proven reserves] are booked has called into question their dual corporate structure."


Shell is 40pc-owned by UK-listed Shell Transport & Trading and 60pc-owned by Royal Dutch, which is listed in the Netherlands.


A six-strong committee of managing directors - two from the UK and four from Holland - runs the company on a day-to-day basis.


One fund manager said Shell should copy the structure of Reed Elsevier, the Anglo-Dutch publishing company. Its shareholders are roughly split two thirds/one third between the UK and Holland. The same five executive directors and six non-executives sit on its UK, Dutch and management boards. Reed also has a separate chairman and chief executive.


Another investor said that he wanted Shell to be run "like a normal company", with a chairman who could listen to shareholder concerns.


The fund managers wanted change soon, with one suggesting that an update should be made at the company's annual meeting in the summer.


Investors were divided about whether Sir Philip, who was Shell's head of exploration and production from 1997 to 2001 when some of the mistakes were made, should be asked to resign. One said: "Somebody needs to effect the change but whether it is him, I am not sure. Getting rid of him does not solve the problem though."

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