Financial Times: Shell poised for restructuring: “Investors blamed the reserves scandal on the complicated governance structure at Shell…” (ShellNews.net)

By James Boxell

Published: October 28 2004

Royal Dutch/Shell is expected to announce today the results of its corporate restructuring review, in what will be one of the biggest reforms of the company in its 97-year history.

The Anglo-Dutch oil group is expected to create a combined board for its separate holding companies and has been exploring an equal distribution of control between its Dutch and UK arms and even a full merger.

The company currently consists of Royal Dutch, the Dutch holding company that controls 60 per cent, and Shell Transport and Trading, which controls the remaining 40 per cent. It was forced into the structural review after it overbooked oil and gas reserves by 23 per cent this year.

Investors blamed the reserves scandal on the complicated governance structure at Shell, which includes a separate Dutch and UK board and a committee of managing directors that sits above the two boards.

They said a lack of clear lines of responsibility allowed the reserves overbooking to go undetected over several years, although the company has said the structure was not to blame. Shell is expected to create a chief executive post as part of any restructuring, with Jeroen van der Veer, the current chairman of the committee of managing directors, favourite for the post.

It is also expected to create a non-executive chairman role that will span the Netherlands and the UK.

Shell has said it will embark in "intensive engagement" with shareholders once the review is published. Any big changes will need to be voted for at its next annual meeting in April. It will also publish third-quarter results today.