The Daily Telegraph: Shell boss 'listening' to shake-up calls

By Christopher Hope, Business Correspondent

06/03/2004

Jeroen van der Veer, the new chairman of Shell, yesterday hinted that the oil giant will make changes to its corporate structure in the next 12 months.

However, he failed to draw a line under the crisis caused by Shell's admission that it had overstated its reserves by 20pc, or 3.9billion barrels.

Some investors are using the problems, which forced former chairman Sir Philip Watts from office this week, to try to change Shell's dual structure. The company is 60-40 split between Dutch and British shareholders, with separate boards in The Hague and London.

Mr Van der Veer said that he was still listening to the views of shareholders. He had met up to 50pc of Shell's investors so far. Consultation would continue until May, after the annual meeting. He wanted to see how Shell's "dual structure" affected its decision making.

"I am still in that listening phase," he said, adding, "You have to think if this is an appropriate governance structure for the future."

He refused to discuss any specific changes but played down one suggestion that Shell should adopt the same structure as Unilever. He said: "I think that the two companies are not the same. They do not have the same histories."

Any changes would be made by April next year, when new corporate governance guidelines are introduced in the Netherlands, he said.

Mr Van der Veer admitted that Shell had to "get this issue of reserves behind us". He added: "But it will take a bit of time."

Shell is being investigated by an internal audit committee and the United States' Securities and Exchange Commission over the reserves. The audit committee should report its findings soon. The SEC probe is more likely to take two years.

Mr Van der Veer yesterday disclosed that it was also facing questions from Euronext, the pan-European exchange. Sir Philip and Walter van der Vijver, the exploration and production chief, left because of a "loss of confidence" from the audit committee.

JJ Traynor, analyst at Deutsche Bank, said there were unlikely to be any more big surprises from Shell. He said: "They have cut 3.9billion barrels off the reserves and sacked the chairman. What else can they do? You have had the big-ticket items."

William Claxton-Smith, director of UK equities at Insight which owns 1.1pc of Shell Transport, said two issues were at stake. "The reserves issue needs to be sorted out quite quickly and that will be when the full audit committee report is published. But the [structure] which dates back to 1907? If that can be sorted out by 2005 that would be fine."

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