Financial Times: Shell needs more than scapegoats
By Brian Groom
Mar 11, 2004
Investors in Royal Dutch/ Shell deserve answers, not scapegoats. Rather than a bloodbath, what is needed is an explanation of why it took so long to reveal shortfalls in proved reserves, and evidence of willingness to make changes that will end its inward-looking culture.
After last week's departures of Sir Philip Watts, chairman, and Walter van de Vijver, head of exploration, allegations that executives discussed reserves problems in early 2002 have increased pressure on Judy Boynton, chief financial officer, and the new chairman, Jeroen van der Veer. The senior management were backed yesterday by the audit committee chairman. Since a clear-out could destabilise the company, it may be wise now to await the result of the audit committee's inquiry. What would help to reassure UK and US investors would be a stronger indication that Royal Dutch/ Shell is prepared to become more open and accountable.
There are ways to simplify its dual board structure short of a merger. Unilever is turning its board-appointed advisory directors into non-executives subject to annual re-election. What should certainly go at Royal Dutch, which controls 60 per cent of Royal Dutch/Shell, are the 1,500 board-controlled priority shares with extra voting rights. They give undue power to the management and supervisory boards.
Some within the company see these issues as a red herring. Swift action on them would, nonetheless, help restore confidence.