Daily Telegraph: Shell plans to overhaul dual board structure

By Christopher Hope, Business Correspondent (Filed: 18/06/2004)

The Dutch directors of Shell will lose their right to block a takeover of the oil and gas giant under proposed changes to its structure. 

Shell has also confirmed for the first time that it is considering adopting a unified board.

Shell's dual structure - it is 60pc-owned by Royal Dutch and 40pc owned by Shell Transport and is run by two boards - has come under fire since Shell announced in January that it had "lost" 20pc of its proved oil and gas reserves.

A Shell spokesman said change was inevitable. She said: "The press release says that everything is on the table. But the one thing that is not on the table is the status quo. There will be change."

One proposal, to be put to next year's annual meetings, will be to scrap 1,500 "special shares" in Royal Dutch.

Each director of Royal Dutch and member of its supervisory board hold six shares each. The remainder are held by a special foundation.

Holders of the shares decide the number of Royal Dutch managing directors who run Shell, and nominate members of Royal Dutch's supervisory board.

They also have the power to give consent to amend the articles of association of the company. Shell's annual report confirms that "the priority shares can be considered an anti-takeover measure".

Analysts were sanguine about the change, though. JJ Traynor, at Deutsche Bank, said: "Who would take over Shell? BP or Exxon?"

Shell's announcement was sparked by criticism from shareholders for carrying out the review in secret.

Shell also confirmed yesterday that it was looking at a plan to unify its twin boards.

It said: "A number of possible structures and improvements to decision making, accountability and enhancement of effective leadership are under consideration.

"Among other alternatives, forms of unified boards to which a CEO would report are being studied."

Shell also detailed the members of the steering group running the review. It comprises Sir John Kerr (chairman) and Sir Peter Job - non-executive directors of Shell Transport - Jonkheer Aarnout Loudon and Maarten van den Burgh - non-executive directors of Royal Dutch.

Jeroen van der Veer, chairman of Shell's committee of managing directors - effectively chief executive - is also on the steering group.

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