The Guardian: Investors seek Shell shake-up

David Gow and Julia Finch

Saturday March 20, 2004

Institutional investors are to demand far-reaching changes in Shell's corporate structure, including a new independent chairman. The call will come on Monday when investors meet senior executives of the Anglo-Dutch oil group after the latest writedowns of its reserves.

The Association of British Insurers, backed by a growing array of US and British investors, is to voice concern about developments at Shell, which faces at least three investigations of its conduct.

Shell officials insisted Monday's talks were long planned but Peter Montagnon, ABI head of investment affairs, said: "We view these developments with very considerable concern and we shall be taking the issues up shortly with the company."

Robert Talbut, fund manager at Isis Asset Management, added: "We need to ensure that the people left inside the company are not tainted by this issue."

The group has already lost one chairman, Sir Philip Watts, and head of exploration, Walter van der Vijver, over the issue - and has sought to buy time by promising talks with shareholders on a new corporate structure between now and the 2005 annual meeting.

Mr Talbut said Shell should bring in outside talent at a senior level, including a heavyweight independent chairman, to prove its determination to "turn over a new leaf".

Michael Hughes, chief investments officer at Barings Asset Management, said: "Have they put this thing back on the rails? There's no evidence of that yet. Investors have to feel Shell is run by people of integrity who can be trusted."

Demanding a radical cultural change, he added: "We want more information, more often, the bad as well as the good."

Eric Knight, who runs US fund Knight Vinke and represents Calpers, the Californian state pension fund, said he spoke for 1% of Shell equity -and demanded new corporate governance and management structures.

"The group does appear to be setting new reporting standards but you can't make an omelette without breaking eggs," he told friends, demanding a unified board with an independent chairman.

Yesterday the group came under further pressure after the New York Times reported that it had withheld information about a big cut in its oil and gas reserves in Nigeria, for fear of damaging commercial relations with the government.

A company spokesman said the group had provided the Nigerian authorities with an explanation of its "recategorisation" and "it will have no impact on the reporting by Shell of its part of Nigeria's reserves". He claimed that Nigeria was satisfied with the group's explanation.

http://www.guardian.co.uk/business/story/0,3604,1173905,00.html