The Scotsman: Shell chief faces investor wrath over dual listing
BY MARTIN FLANAGAN
Mon 9 Feb 2004
INVESTORS in Shell, which is still reeling under the fallout from its overstated oil reserves debacle last month, said yesterday it will face a groundswell of pressure to reform its dual listing structure and complicated reporting structures when leading executives go on their roadshow of institutions this week.
Sir Philip Watts, Shell’s UK chairman, apologised for the major error last Thursday, which came alongside disappointing Q4 trading results. He said he would listen to any institutional concerns about the oil giant’s listing in London and the Netherlands and its separate boards of directors.
Robert Talbut, investment strategist of UK fund manager Isis Asset Management, said yesterday he believed Shell would benefit from "a standard Anglo-Saxon structure of the board", with demarcation between executives and strong independent non-executives, as well as transparent reporting structures. Talbut said: "The bottom-line for us is that Shell has been an underperforming company for a long time relative to its peers within the oil industry.
"There are a lot of us [institutional investors] who think Shell’s structure is overly-complex. It probably inhibits fast and firm decision-making."
Another fund manager added: "We have asked them to review the dual listing and come back with the findings as to why they believe it is their optimal structure. Getting rid of it could be the catalyst for turning around the company."
It also emerged yesterday that Calpers, America’s biggest pension fund and one of the leading shareholder activists across the Atlantic, is backing a campaign for Shell to change its boardroom structure.
Calpers is supporting New York investment fund Knight Vinke Institutional Partners, and a growing array of important UK investors in demanding change at the company.
KVIP says it wants a change to the current Shell structure, preferring a chief executive and an independent single board. At present, Watts is chairman of the committee of managing directors, appointed from the boards of both Royal Dutch and Shell Transport and Trading of the UK.
A Shell spokesman would not comment on the entry of Calpers, a powerful influence in American corporate life, into the debate.
However, on the eve of the Shell roadshow, where Watts is expected to meet shareholders representing about 35 per cent of the company, the spokes-man said: "At this stage we are not committing to any changes [in structure], but we are committing to listening to shareholder views and taking them on board.
"If shareholders believe this is an issue, we should listen. The subject [of the dual listing and board structure] will be on the agenda. Then it will be up to the board to assess and make a decision."