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The Financial Times: Shell looks to overhaul management after studying other multinationals


By Ian Bickerton in Amsterdam and Clay Harris in London

Financial Times; Mar 16, 2004


Royal Dutch/Shell is exploring ways to overhaul its management structure, in a move that would answer some investors' criticisms after it restated oil and gas reserves in January.


The Anglo-Dutch group has reviewed the board structures of three other multinationals with roots in two countries. It is seeking models for its own senior team, according to a person with knowledge of the plans.


The companies reviewed were Fortis, the Dutch-Belgian bancassurance group; BHP Billiton, the Australian-UK mining group; and GlaxoSmithKline, the UK-US pharmaceutical company.


The person said: "[Shell] has reviewed the structures of those three companies and may move quickly to collapse its own management structure." The insider said Fortis was considered the most likely model, given its experience of the complexities of issues such as Dutch tax law. Fortis has two separate companies but has unified its shares and has a single chief executive and executive board. It announced last week that it would have a single chairman from May.


Shell is likely to move to a single chief executive and single chief financial officer rather than the current management committee structure, which sits on top of the Dutch and UK companies' separate boards, the person with knowledge of Shell's plans said. It is also possible that Shell will recruit a chairman from outside the company. The person familiar with Shell's thinking suggested that it might choose an American, if only to avoid criticism from either British or Dutch factions. Shell has already made changes in the wake of this month's forced departure of Sir Philip Watts as chairman. One of his former roles - that of chairman of Shell Transport and Trading, the group's UK arm - has been made non-executive.


The group has also decided that its "conference", which brings together the two boards and executive directors, will have a non-executive chairman.


Shell said yesterday: "We are actively listening to the concerns of shareholders, both institutional and retail, after which we will give serious consideration to the way forward and make recommendations for the shareholders' approval."


It added: "These matters are being pursued with deliberate speed, but they are serious issues which should not be addressed hastily and without appropriate consultation and deliberation."


Shell said it had not retained the services of Harvey Pitt, former chairman of the US Securities and Exchange Commission, or his consultancy firm, and "the matter is not

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