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Daily Telegraph: Investors in Shell seek shake-up of structure

By Christopher Hope, Business Correspondent

(Filed: 16/01/2004)


Institutional investors are writing to Shell's senior non-executive director to suggest a series of top-level changes to the way the company is run. 


The shareholders want to capitalise on the uncertainty gripping the oil major in the wake of last week's admission that it had overstated its reserves.


Investors are hoping that the letter will set up some constructive discussions around the time of Shell's full-year results next month.


The letter suggests a series of corporate governance changes under which Shell would be run on the lines of an international plc such as HSBC or Unilever.


One investor said: "It looks at the company's internal controls and its means of managing information and assets. We need to take the long-term view. It is an opportunity to review the way the company is structured."


Investors are confused by the over-bureaucratic set-up of Shell, which is controlled by a Dutch board, a British board and a committee of managing directors.


Another shareholder said: "Shell is a merger in 1907 that has not quite bedded in yet."


The letter does not call for the heads of Sir Philip Watts, chairman of the committee of managing directors, or Judy Boynton, the finance director. The pair have been widely criticised by investors for not facing up to analysts in a conference call when Shell released the bad news last week.


One shareholder said: "This is a long-term business. We are not saying that something should happen in the next five minutes. It is prudent to look at the structure of a multinational company."


Another investor blamed the company's over-complex structure for it slipping from first to fourth, according to some rankings over the past 20 years.


He said: "That structure has failed investors - taking out people at the top does not change that structure."


The letter will be sent to Lord Oxburgh of Liverpool, the senior non-executive on Shell's UK board, next week.


The letter is being co-ordinated by the Association of British Insurers. First drafts are already being circulated among investors in the City.


One shareholder said: "We are talking to other investors in the UK and overseas. We are co-ordinating our views - but it is a bit like herding cats."


The Association of British Insurers declined to comment on whether it was involved with the letter. Peter Montagnon, the association's head of investment affairs, said: "There is clearly concern among our members and we are looking into the issue."


A Shell spokesman said: "The executive directors of Shell Transport and Trading will present the results on February 5 and these executive directors are Sir Philip Watts and Judy Boynton."


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