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The Observer: Shell rebels to press Royal Dutch for changes


Oliver Morgan

Sunday February 15, 2004


Angry Shell shareholders are to step up demands for a radical overhaul of the oil giant's antiquated structure by targeting the group's Dutch board.


Following meetings with chairman Sir Philip Watts last week, many institutional investors remain unhappy with the company's response to the downgrading of reserves last month.


Most now accept Watts will not resign over the issue. Some believe it is important that he stays to transmit shareholder pressure to scrap the group's dual structure from the UK to Holland.


Watts chairs Shell's six-strong committee of managing directors, drawn from the boards of Royal Dutch and Shell Transport & Trading, respectively listed in Holland and London. Royal Dutch owns 60 per cent of the group; Shell owns 40 per cent.


Shareholders say it was clear last week that convincing the Royal Dutch board of the need for change was the most significant obstacle. One investor who met Watts said: 'He was saying you have to convince the Dutch board. I think we are going to have to have a go at the Dutch.


'I think we will want meetings with the Royal Dutch board. This is going to be a year-long issue.'


Eric Knight, of Knight Vinke Institutional Partners, an investment fund with significant Shell shares and backed by the US's largest state pension fund, Calpers, says: 'The focus is now moving to Royal Dutch.'


The decision last week by another Anglo-Dutch group, Unilever, to move to a unified structure would increase the pressure. 'It is going to make it very difficult to resist change along the lines that it is too complicated.'


Another person close to the discussions said: 'The Anglo Saxons [Watts and ST&T's American finance director Judy Boynton] are feeling the pressure more than the Dutch. The Dutch shareholders have been comparatively quiet.'


London shareholders say it is essential that investors in Royal Dutch work with them. Of the seven largest investors in Royal Dutch, four are US funds. They are likely to add to the pressure. Calpers is writing to Watts demanding meetings with him and KVIP to thrash out the governance issues.,6903,1148170,00.html

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