Financial Times: Investors 'to embarrass' Shell board

By Sundeep Tucker in London

Posted 14 June 04

At least six leading investors in Shell Transport & Trading are planning to ask "embarrassing" questions at this month's annual meeting unless the company provides satisfactory details of its internal review into governance and structure.

The oil group, which is reeling after four reserves downgrades since January and management upheaval, has promised to review its corporate structure.

But shareholders are growing increasingly impatient at the lack of transparency surrounding the process and, unusually, are preparing to vent publicly their frustration at the London meeting on June 28. Royal Dutch Petroleum, Shell's larger Netherlands-based arm, holds its annual meeting in The Hague on the same day.

In April, Shell said it had set up a group to review the company's structure after the reserves debacle. But it has refused to yield to demands to name the executives involved in the review, the group's terms of reference and to whom it will report.

The issue is understood to have been raised at two secret meetings last month between Aad Jacobs, chairman of Shell's audit committee, and representatives from some of the company's leading investors.

One of Shell's top five UK investors said: "We are worried that the company is in denial about its problems. We are uneasy about the secrecy surrounding the internal review. Unless we are given proper assurances, the annual meeting is likely to be embarrassing for the management."

Another investor said: "Only by telling us more about the review process will we consider the company is serious about change. Like many other shareholders, we are planning to ask questions from the floor of the meeting."

Four other investors said that they, too, were preparing to attend the meeting and were planning to ask a question.

The pressure on Shell executives will be brought into focus on Monday morning when Lord Oxburgh, acting chairman of Shell Transport, and Sir Peter Burt, the senior independent director, are expected to attend the monthly gathering of the influential investment committee of the Association of British Insurers.

Peter Montagnon, the committee's spokesman, said on Sunday he expected many City institutions to speak out at the annual meeting.

A spokesman for Shell Transport said: "We are in dialogue with shareholders and take their concerns seriously. An update of the review will be given at the 2004 company meetings."