The Daily Telegraph: Shell management rejig wins cautious approval
By Christopher Hope, Business Correspondent (Filed: 19/02/2004)
Sir Philip Watts is proposing to run Shell on more conventional lines by strengthening the role of an existing group of directors at the oil major.
The move is designed to head off criticism about the way Shell is run after the Anglo-Dutch company overstated its proven oil reserves by 20pc. Many shareholders have used the ensuing furore to try to force Shell to streamline its corporate structure.
Shell is split 60-40 between two companies, Royal Dutch in the Netherlands and Shell Transport and Trading in the UK. It has Dutch and British boards, as well as a committee of managing directors chaired by Sir Philip that runs the company.
Sir Philip's plan involves formalising the role of a fourth group, the combined group of 24 executive and non-executive directors from both Dutch and British arms.
This group, called "the conference", already meets between six and eight times a year to consider strategy and is also chaired by Sir Philip.
Sir Philip has suggested to investors that "the conference" will consider at its next meeting whether it should take a more central role in the running of the company. The meeting is expected within four weeks.
If the plan is adopted, it is likely that "the conference" will be slimmed down to a more manageable number of directors running both the UK and Dutch businesses.
The plan received a cautious welcome from investors. One fund manager said it was "an interesting idea".
Another institutional shareholder said: "It seems to tie in with the substance of what we were told." He added that it was a pleasant surprise to learn that Shell had a combined board already that appeared to be involved in strategic decisions.
He said: "I have been told that that is how it works - the Royal Dutch and Shell Transport and Trading boards are more legal type of boards."
Another investor said the plan was not radical enough. He said: "It sounds very Germanic. It seems more of a hindrance to progress than just a path. The fundamental problem is that this company needs an outsider to come and take a look at it with a fresh pair of eyes."
Shell has been pressed to follow the examples of other Anglo-Dutch companies like Unilever and Reed Elsevier, which have unitary boards.
Tony Alves, an analyst at Investec Securities, said Shell had to appoint a chairman if the new structure is adopted.
Mr Alves said: "They also need to go one step further and have a new chairman who can kick the chief executive around."
Shell declined to comment on the proposal. However, a company source said that Sir Philip is currently talking to shareholders and would be reporting back his findings to the company.