The Independent: Shell hints at abolishing its dual board
By Michael Harrison, Business Editor
18 June 2004
Royal Dutch/Shell was forced yesterday to give shareholders an update of its review into the way the group is governed, confirming for the first time that the abolition of its antiquated dual board structure is one of the options under active examination.
The oil giant also disclosed for the first time the composition of the steering committee carrying out the review and said it planned to make its conclusions public in November.
Shell went on to announce that the priority shares held in its Dutch half - seen by many as a poison pill defence against takeover - are to be abolished from next April when a new code of corporate governance takes effect in the Netherlands.
Institutional investors had been putting increased pressure on Shell to be more forthcoming about the review, culminating in the publication this week of a letter from two big US shareholders - the Californian pension fund Calpers and Knight Vinke - calling for more "openness and candour" from the company if it wanted to rebuild confidence.
Shell has now responded by setting out details of the review. The five-strong steering group is being chaired by Sir John Kerr, one of Shell's UK non-executives. Its other members are the current chairman of Shell, Jeroen van der Veer, and three other non-executives - Sir Peter Job from the UK side and Jonkheer Aarnout Loudon and Maarten van den Bergh from the Dutch half.
The steering group is being assisted by a working group made up of senior company executives including its legal director, head of taxation, group treasurer and two company secretaries. A battery of lawyers, accountants and investment banks is also providing advice.
In a Stock Exchange announcement, Shell said a number of possible structures for the company were being examined. "Among other alternatives, forms of united boards, to which a chief executive officer would report, are being studied. Nothing is ruled out," the statement added.
Shell intends to give shareholders a further update of the steering committee's progress when it holds simultaneous annual meetings of shareholders in London and The Hague in 10 days' time. "Hopefully, it will lead to an informed debate," a spokesman said.
The corporate governance review sprang from the fiasco over Shell's misreporting of reserves which has sparked formal investigations by regulatory authorities on both sides of the Atlantic and an avalanche of class action lawsuits from aggrieved investors. Shell has been forced to cut its proven reserves four times since January and now has 4.5 billion barrels less than it previously estimated.