Royal Dutch Shell Group .com

The Sunday Telegraph: Shell investors reject Watts' explanation

By Sylvia Pfeifer

(Filed: 18/01/2004)


Investors in Royal Dutch/Shell have dismissed the explanation given by Sir Philip Watts, the chairman, for his absence during a conference call 10 days ago in which the company admitted it had overbooked its reserves by 25 per cent. 


His refusal to face the City stunned institutional investors who have since written to the senior non-executive on Shell UK's board, Lord Oxburgh of Liverpool, asking for a meeting.


Watts broke his silence for the first time since the announcement in a letter sent to employees on Friday in which he acknowledges that the move had caused "significant concern and, in some quarters, outrage".


He goes on to explain that as the announcement was made during the company's closed period ahead of its fourth quarter results on February 5, communications had to be limited.


"Since the announcement involved a technical recategorisation, and we could not add any further market sensitive information, I did not participate in the January 9 teleconference. Given subsequent reactions, to some this might not seem to have been the correct decision but we did achieve the objective of giving the facts unclouded by personality issues in the first instance," he says.


Leading shareholders yesterday dismissed the explanation as too little, too late. "This is a silly and very unfortunate excuse," said one investor. "Believe it or not, we need to know what happened and who is responsible."


"The company could have explained what had happened in connection with the recategorisation," said another investor. "We are looking really at the past and in terms of the quarterly results it does not make any difference. It looks bad that Watts was not prepared to explain this in person."


A third commented: "It would be somewhat unfair to criticise him for what he's said to his staff. It is appropriate that he would want his staff not to worry and we want them to get on with doing their jobs and making money for us. What Watts has done already is bad enough."


Investors are hoping that Oxburgh, who has been in Antarctica but is due back in Britain this weekend, will respond to their letter this week.


It raises concerns about the complex governance structure at the company and suggests a series of changes under which Shell would be run on the lines of an international plc similar to Unilever.


"In the past people were willing to make allowances [in terms of performance] for Shell because it was seen as a conservative company. It is now clear it was over-optimistic so why should we make concessions on the corporate governance side?" said one investor.


Peter Montagnon, the head of investment affairs at the Association of British Insurers, yesterday declined to comment on any developments but said: "Clearly our members are very concerned. We shall be looking into the issues.";$sessionid$OUAYFHSKUEIU5QFIQMGSFF4AVCBQWIV0?xml=/money/2004/01/18/cnwatts18.xml&menuId=242&sSheet=/portal/2004/01/18/ixportal.html&menuId=242&_requestid=56929


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