Financial Times: Shell investors near governance pact
By Sundeep Tucker in London and Ian Bickerton in Amsterdam
Published: May 21 2004 22:00 | Last Updated: May 21 2004 22:00
Posted 22 May 04
Leading Dutch shareholders in Royal Dutch/Shell have stepped up contacts with UK investors in a joint drive for changes in structure and governance improvements at the embattled oil company.
Investors in both countries have agreed that change in governance, transparency and controls is essential if Shell is to recover credibility following this year's reserves downgrades and management upheaval.
As a result of the recent meetings, Netherlands-based ABP and PGGM, two of Europe's largest pension funds, have agreed a common ground on how to tackle the Anglo-Dutch company.
The news comes as Jeroen van der Veer, Shell chairman, prepares to meet UK investors next month - his first face to face meetings since he assumed the role.
Mr van der Veer's offensive will start after the publication of the company's delayed 2003 annual report next Friday, and finish before the annual meeting on June 28.
Other senior Shell directors - such as Sir Peter Burt and Lord Oxburgh - are also believed to be meeting investors prior to the annual meeting.
The Dutch funds have not presented Royal Dutch/Shell with an ultimatum for changes. But analysts said the pact with UK investors indicates that the oil company will have to deliver concrete proposals for governance change to satisfy its shareholders.
A spokesman for PGGM said: "There have been meetings with UK investors and there is some movement. We have the impression that approach of the UK investors and Dutch investors might be coming more closely together."
The pension fund has also held "fruitful" recent discussions with Royal Dutch/Shell. "There are more intensive talks and they give us a positive feeling."
PGGM said it anticipated those discussions would lead to proposals at the annual meeting, "especially on the side of good governance and improvement of controls, which are positive enough [for us] to agree with".
UK investors want Shell to abolish its dual share structure, appoint an independent chairman and non-executives answerable to shareholders.
"Contact has stepped up. The Dutch investors now understand that no change is not an option. The company is hearing this message loud and clear on both sides of the channel," said one UK investor. Another person familiar with the situation said: "This is a delicate issue for the Dutch and any change could only happen with care and diplomacy. But Dutch and UK investors are acting in tandem. At the beginning, this was not happening. A lot is happening behind the scenes."
Shell said on Friday that it had an ongoing dialogue with investors