The Daily Telegraph: Shell agrees to change structure over joint board
By Christopher Hope, Business Correspondent (Filed: 23/03/2004)
Shell has told investors that it will use only a non-executive director to chair the meeting of its combined board every two months.
The news is further evidence that the embattled oil giant is edging its way towards running itself as a conventional public company.
Shell has an unusual corporate structure. It comprises two companies, Royal Dutch and Shell Transport and Trading, based in the Netherlands and the UK.
Both companies have individual boards which meet regularly. However, the combined board - called "the conference" - meets at least six times a year.
Previously, Shell's chairman of the committee of managing directors - effectively the chief executive - would chair this meeting.
However, in future, the meetings will be chaired by a non-executive director, possibly alternating between the Dutch and British sides of the company.
An idea to use the conference, comprising 22 non-executive and executive directors, as a "de facto" unitary board was being pushed by Shell's former chairman Sir Philip Watts before he quit last month.
A Shell spokesman confirmed the development last night. "The chair of the conference will be a non-executive," he said.
The news emerged from a meeting of leading shareholders and Shell non-executive directors at the Association of British Insurers in London yesterday. Shell is in crisis because of a disclosure in January that the company had overstated its proven oil and gas reserves by 20pc or 3.9billion barrels.
Last week, the situation worsened when Shell increased the number of unproven barrels to 4.1billion, and cut its 2003 proven forecasts. The meeting had been scheduled a few weeks ago, but had been billed as a showdown after Shell's problems over its reserves.
Investors who attended the meeting described the talks as "friendly".
The ABI said the meeting was "constructive" but that there needed to be more meetings with investors. A spokesman said: "We are pleased that the non-executive directors of Shell Transport are listening to the views of shareholders."
A Shell spokesman added: "From our point of view [it was] considered to be both helpful and constructive."
Meanwhile, Shell announced a major restructuring of its Nigerian operations, where much of the overstatement of proven reserves occurred. Up to a third of Shell's 5,000 workers there could go.
Chris Finlayson, managing director of Shell's Nigerian operations, said: "In the current extremely tight budget environment, it is essential to reduce our operating costs to allow sufficient funds for profitable investments."
The restructuring will allow Shell to increase its crude oil output by 50pc to 1.5m barrels per day.