Financial Times: An independent chairman at Shell Group a must (Letters Column)
From Mr Christopher Jackson.
By Christopher Jackson
Published: April 23 2004 5:00 | Last Updated: April 23 2004 5:00
Sir, Overbooked oil reserves are bad enough, but the revelation (in the excellent executive summary report of Davis Polk & Wardwell to the Shell Group audit committee) of the way Shell behaves at its most senior level comes as a real shock.
In contrast to the received impression that Shell is a giant, perhaps dominated by committees, of the highest probity and management competence, there is evidence not only of excessive dominance by the past chairman, but of ineffective communication between the two most senior managers and a disregard both of legal requirements and of "intellectual integrity" (which I have always prized most highly as a management asset) in relation to the way the business was run.
The report also makes it clear that Shell has been underperforming for years in relation to Exploration, which semi-automatically supplies the group chairman. The case for an independent chairman of the group, and for a more assertive role for non-executive directors who have perhaps in the past not been expected or sufficiently informed to exert necessary supervision on behalf of shareholders, could not have been more forcefully made.
Is the same ethos that led to overbooking reserves leading to overambitious short-term targets in other parts of the company, the achievement of which may weaken the long-term business? Amid all the other consequences that flow from this damning report, Shell should re-examine from top to bottom the balance between its long-term and short-term goals and how to achieve them.
Christopher Jackson, Sevenoaks, Kent TN13 1QA