The West Australian: Anger at Shell's slow review pace

JOHN PHACEAS

28 June 2004

Today looms as D-Day for troubled oil giant Royal Dutch-Shell, with shareholders expected to vent their spleen over the reserves write-down fiasco when they gather for this year's annual meetings in London and The Hague.

Shell has been under intense pressure since admitting in February that it had over-estimated its oil reserves by 25 per cent, or 4.4 billion barrels. The move wiped billions off the market value of the Anglo-Dutch group, and forced three senior executives, including chairman Sir Philip Watts, to resign.

In particular, institutional investors have demanded widespread change of the group's ungainly twin-board structure to make management of the group more transparent and accountable. Shell had hoped that some of the heat would be taken out of today's meeting by its commitment last week to initiate a wide-ranging review.

"A number of possible structures, and improvements to decision-making, accountability and enhancement of effective leadership, are under active consideration," Shell said. "Amongst other alternatives, forms of unified boards, to which a CEO would report, are being studied. Nothing is ruled out at this stage."

While any move to overhaul its archaic structure was welcomed, big shareholders remain angry that the review will not be completed until November, and that any actual change will be put off until after next year's annual meeting.

In a letter to Shell last week, US pension fund Calpers, one of Shell's biggest shareholders, said the review should be accelerated by at least two months and that not all "remedial measures" should be put off until after next year's annual meeting.

Calpers said it also intended to take an active role at the today's meeting, suggesting it would be pressing hard for more information about the review.

Similarly, two major British investment groups - the National Association of Pension Funds and Association of British Insurers - are expected to also make their presence felt.

Peter Montagnon, investment affairs head at the ABI, told WestBusiness that the November deadline for the review would at least ensure some "momentum" but that his association believed shareholders needed to have more direct involvement in the process.

The NAPF said it also expected the review to include some consultation with shareholders.