The Guardian: Shell to scrap twin board structure: The overhaul will see more than 200 management jobs transferred across the North Sea, representing 7% of the 3,000 staff who currently work at Shell's London headquarters.: some investors were concerned by news that Shell was reviewing a further 900m barrels of oil and gas reserves following an extensive audit. (ShellNews.net)
Adam Jay and agencies
Thursday October 28, 2004
Oil giant Royal Dutch/Shell today said it would scrap its twin board structure as it battles to restore confidence in the wake of its reserves crisis.
The announcement came as the Anglo-Dutch company reported a 70% surge in profits for the third quarter. Shell made $4.41bn (£2.4bn) in the three months, off the back of record oil prices.
The current structure - with one board in the Netherlands and another in the UK - has been criticised by investors who say it lacks transparency and accountability and contributed to the reserves overbooking scandal.
In January, Shell admitted it had overbooked its oil and gas reserves by 20%, a disclosure which pummelled its shares, led to fines of £83m from regulators and the departure of three senior executives, including chairman Sir Philip Watts.
Following the scandal, Shell - the world's third biggest oil group - pledged to review its corporate structure and governance.
Today's proposals will see directors based at a single head office in The Hague, the Netherlands, while Jeroen van der Veer will remain chief executive and be handed extra powers in an effort to speed up reform. The merger is scheduled to take place next May.
The overhaul will see more than 200 management jobs transferred across the North Sea, representing 7% of the 3,000 staff who currently work at Shell's London headquarters.
Shell's assets are currently owned by its two parent companies, listed on different stock markets. Royal Dutch Petroleum, with its headquarters in The Hague, owns 60% of the assets, while London-based Shell Transport controls the remainder.
But the company will now be unified - and known as Royal Dutch Shell plc - under a single board, chairman and chief executive. It will have its primary stock market listing in London, with a secondary listing in Amsterdam and American Depositary Receipts trading in New York.
Shell said the proposals had the unanimous backing of the board and would bring greater simplicity, efficiency and accountability. Although many head office functions would move from London, the company said the global downstream and trading businesses would remain in the UK.
Shell chairman Aad Jacobs said: "Our proposals will not satisfy everyone in every respect but we firmly believe that we have come up with the best solution possible."
Shares in the company had climbed by 20p to 443.75p at 9.20am. But some investors were concerned by news that Shell was reviewing a further 900m barrels of oil and gas reserves following an extensive audit.
"The unification of the company - that is the plus in this story," said Eureffect asset manager Lex Werkheim. "The negative is the additional 900m barrels under review. Without the news of the structure change, the stock could have been trading in the red."