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The Independent: Philip Watts to quit early as chairman of Shell

By Michael Harrison

13 January 2004


Sir Philip Watts is expected to quit early as chairman of the Anglo-Dutch oil giant Shell following the company's shock announcement last week that it had cut its estimate of oil and gas reserves by a fifth.


The Shell chairman, who infuriated investors and analysts by failing to host the teleconference at which the bombshell was dropped, is due to stand down in June next year when he reaches 60, the company's compulsory retirement age for executives. However, it now appears Sir Philip is likely to stand down well before then.


"I don't think he will get beyond the end of this year. This is a very difficult time for him and there are no signs that it is likely to get any better," one observer said. "He may want to tough it out but the truth is he has been badly winged by this announcement and I can't see him staying on another 18 months."


Despite the sharp drop in Shell's share price and the shock felt within the investment community, Sir Philip is not thought to have any plans to mount a "charm offensive" among institutional investors. He is not due to see any of Shell's biggest shareholders until after the company's full-year results on 5 February.


Sir Philip's position is made all the more vulnerable as he was chief executive of exploration and production during most of the period from 1996 to 2002 when Shell was over-booking oil and gas reserves. He took over as chairman in June 2001 and has never had a comfortable relationship with the City.


Shell's succession review committee is chaired by one of its Dutch directors, Jonkheer Aarnout Loudon, and includes its former chairman Sir Mark Moody-Stuart. But the real power within the Anglo-Dutch company is held by its six-strong committee of managing directors - the six top executives who run Shell.


The two favoured internal candidates to take over from Sir Philip are Walter van de Vijver, the Dutch head of exploration and production, and Malcolm Brinded, who comes from Shell's UK half and is head of gas and power.


Analysts suspect that on a "Buggin's turn" basis, the next chairman is almost certain to be Dutch since the previous two have been British.


Some shareholders have already begun to voice concern about Sir Philip's continued tenure. But unless they band together and deliver an ultimatum to Sir Philip, in the same way that ITV investors forced the resignation of Michael Green, it may be difficult to unseat him by pressure because of the company's dual structure and lack of a strong pro-active board.


The senior independent non-executive director of Shell Transport and Trading, the UK half of the company, is the relatively unknown Lord Oxburgh - a former chief scientific adviser to the Ministry of Defence and rector of Imperial College London.


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