London Evening Standard: Shell forced to lift lid on shake-up
17 June 2004
SHELL has finally caved in to unprecedented pressure from its institutional shareholders still smarting from the oil giant's reserves fiasco and revealed it will give a full update on the shake-up of its cumbersome corporate structure in November.
Facing widespread criticism for the failure to produce a progress report since conceding it had to look at the way it worked, the Anglo-Dutch group today set the terms of reference for its review and revealed who is working on it.
For institutional investors battling Shell's ivory tower approach to the City, its short statement was a major victory. One investor said: 'It's a good start, but in some respects I'm not sure why it's taken a couple of months for them to come out with this.'
Lloyds TSB chairman Maarten van den Bergh is one of four non-executives of either the Dutch or UK arm of Shell who will thrash out ideas on the best corporate structure to take the group forward along with chairman Jeroen van der Veer.
Sir Peter Job, Sir John Kerr and Jonkheer Aarnout Loudon complete the team. Shell also revealed that its legal advisers were Slaughter & May and De-Brauw Blackstone Westbroek.
Shell conceded: 'Forms of unified boards, to which a CEO would report, are being studied. Nothing is ruled out at this stage.'
Van der Veer pledged to study ways to simplify Shell's widely-criticised structure earlier this year after the reserves crisis which saw the group admit it had lied to the City and overbooked its proven oil and gas discoveries by nearly five billion barrels.
Shareholders want the company to ditch its 100-year old structure, claiming it essentially has three boards topped by a fourth, the committee of managing directors. They have asked for one, Plc-type board with clear lines of accountability to be put in place.
Shell's action today follows a heated meeting with UK institutions on Monday, chaired by the Association of British Insurers, when UK chairman Lord Oxburgh was urged to publish a progress report ahead of the group's annual meeting on 28 June.
Pressure mounted yesterday when US investors Calpers and Knight Vinke 'explicity requested' Shell to 'provide the market with the minimal level of disclosure'.
Shell said its review will study the possible simplification of the group management structures, how to improve decision making, and 'enhance effective leadership'.
It added: 'It is the intention that results will be made public by the boards in November, after which a round of further and more focused consultation with shareholders will be undertaken.'