Posts from ‘September, 2009’

THE WALL STREET JOURNAL

By James Herron

Of DOW JONES NEWSWIRES

SEPTEMBER 11, 2009, 10:47 A.M. ET

LONDON (Dow Jones)–The controversial head of Royal Dutch Shell PLC’s (RDSB.LN) remuneration committee, who angered shareholders by awarding bonuses to executives who had missed performance targets, will step down on October 1, the company said in a statement Friday.

The retirement of Peter Job, “is purely because he has been a non-executive director for nine years,” after which time it is standard corporate practice to retire in order to preserve the independence of the board, said a Shell spokesman.

However, Job has been under pressure since May, when 60% of Shell shareholders voted down executive directors’ pay packages at an acrimonious annual general meeting in the Hague, the Netherlands. Following the vote, some of Shell’s institutional investors called for Job to resign.

Under the rules of Shell’s long-term incentive plan, the executive directors should receive no bonus shares if the company ranks fourth or lower in a group of 10 of its peers on the basis of total shareholder return. In 2008, Shell was fourth, but Job’s remuneration committee decided to award executives half the shares allotted for third place, prompting shareholder anger.

The Shell spokesman said talks with shareholders over changes to the company’s remuneration policy are, “still in the works.”

“We took the outcome of the vote very seriously…there will be more engagement with shareholders shortly for proposals for remuneration packages for the second half of 2009,” he said.

Shell had already broadened the criteria on which its long-term incentive plan is judged to improve its accuracy before the AGM vote, the spokesman added.

Job is a British national and former Chief Executive of news agency Reuters, now part of Thomson Reuters Corp. (TRI). He has been a non-executive director of Shell since 2001. He is also a non-executive director of Schroders PLC (SDR.LN) and TIBCO Software Inc. (TIBX) and a member of the Supervisory Board of Deutsche Bank AG (DB), Shell said on its Web site.

He will be replaced by Hans Wijers, formerly of Shell’s Corporate and Social Responsibility Committee.

-By James Herron, Dow Jones Newswires; +44 (0)20 7842 9317; james.herron@dowjones.com

WSJ ARTICLE

The Board of Royal Dutch Shell today announced that Mr Hans Wijers steps down from the Corporate and Social Responsibility Committee and joins the Remuneration Committee where he will succeed Sir Peter Job as Chairman of that Committee with effect from 1 October 2009.

Sir Peter will remain a member of the Committee until his retirement from the Board at the next Annual General Meeting in May 2010, at which time he will have served 9 years as a Non-Executive Director.

Lord Kerr of Kinlochard steps down from the Remuneration Committee and joins the Audit Committee to fill the vacancy arising from Mr Lawrence Ricciardi’s resignation from the Audit Committee. Mr Lawrence Ricciardi joins the Nomination and Succession Committee until his retirement from the Board at the next Annual General Meeting, at which time he will have served 9 years as a Non-Executive Director.

Lord Kerr and Mr Nick Land will in addition to the other Board Committees also join the Corporate and Social Responsibility Committee.

All appointments and resignations are with immediate effect, except as stated otherwise.

Contacts

Shell Investor Relations
Den Haag – Tjerk Huysinga: +31 70 377 3996 / +44 207 934 3856
New York – Harold Hatchett: +1 212 218 3112

Shell Media Relations
International, US, UK, European Press: +31 70 377 3600
The Netherlands Press: +31 70 377 8750

Chevron will approve an investment of about A$42 billion ($36 billion) in the venture off Western Australia, the FT said. State Premier Colin Barnett has said the project will cost A$50 billion. Chevron and partners Exxon Mobil Corp. and Royal Dutch Shell Plc haven’t given a figure.

Sept. 11 (Bloomberg) — A defeat for Norway’s Labor-led coalition in next week’s election may pave the way for oil companies such as Royal Dutch Shell Plc, Exxon Mobil Corp. and StatoilHydro ASA to explore more of the country’s Arctic waters.

US oil firm Chevron has signed $60bn (£36bn) worth of deals to supply natural gas to Japan and South Korea from its Gorgon project in Australia. Chevron and its partners in the project, Royal Dutch Shell and Exxon Mobil, are expected to give the go ahead for production in the coming weeks.

We have published today a letter received from a throughly disillusioned German businessman Peter Wittig, who for several years, operated a Shell petrol station in Germany.

We noted similarities with Shell dealers who contacted us when we operated the Shell Corporate Conscience Pressure Group. Over 200 Shell UK dealers became members. Like the German businessman, many said they had been deceived and cheated by Shell. This was partly during the period that David Pirret, now a Royal Dutch Shell Executive Vice President, was head of Shell UK Retail Department and therefore the executive responsible for the predatory behaviour.  Like Peter Wittig, many Shell UK retailers could not reconcile Shell’s ruthless unscrupulous conduct with the pledges of ethical trading proclaimed in the Shell General Business Principles.

This discrepancy was highlighted in a letter we received from Shell Agent Operator, Sheila Gee.

Dear Mr Donovan

I have just read your leaflet entitled “RETURN OF THE ROBBER BARONS“.

My husband and I have been Shell station operators for 51/2 years up until 31st March 1999. Along with many other operators, our site has been taken over by Shell and is now being directly managed by them.

We suffered substantial losses from August 1998 when the new operating contracts came in. The new terms imposed by Shell made it impossible to conduct our business on a profitable basis. I am aware that many other operators have also been forced out of business by Shell. I understand that you will be publishing letters from some of them in coming weeks.

My husband and I experienced the “Bully Boy Tactics” mentioned in your leaflet. The Shell Regional Manager, Mr Stephen Gregory, came on to our site and issued a 48-hour ultimatum. We were told to comply with his edict or we would be out immediately. Such ruthless conduct must be immoral.

I confirm that in my experience Shell UK operates oppressively against small business people. Its staff has acted unscrupulously and possibly illegally. The tactics of Shell UK management is completely opposite to the honesty and integrity promised by Shell in its code of ethics.

Shell seems to think that it is so all-powerful that it can steamroller over any small business people who complain about its scandalous business practices.

How dare they spend £25 million on a public relations campaign to promote Shell’s reputation when they treat people so appallingly.

I understand that the Shell Shareholders Organisation intends to ask the Advertising Standards Authority to investigate Shell’s campaign on the grounds that the public is being misled about Shell’s integrity. A number of former Agent Operators, including my husband and I, will be pleased to supply evidence to an ASA investigation.

I also intend to take my case up in person with Shell Chairman, Mr Mark Moody-Stuart, at the forthcoming Shell Annual General Meeting. Several other former Shell Agent Operators will also be in attendance to protest in the strongest terms against the wicked policies of Shell, which have driven many other decent hardworking people and us to despair and destitution.

Yours sincerely
Sheila Gee

Some Shell Retailers used even stronger language to describe Shell’s conduct.

Letter from Shell station operator, J Simpson & Sons Ltd dated 7 April 1995: “We would hope this letter may help you and serve as a warning to others contemplating any form of activity with this company” (SHELL)

Letter from Shell station operator, Roger Threlfall: “I am not at all happy with Shell. I believe the current regime is totally immoral”

Letter from Shell station operator (and former Police Officer) Patrick Bradshaw, to Shell Chairman Mark Moody-Stuart: “because of the underhanded manner and deceit of some of your management..”: “bully boy tactics”

Letter from Patrick Bradshaw to his local MP: “Management that can falsify the truth without a moments hesitation”: Shell’s ruthlessness and cheating practices”

The results of a survey of over 1400 Shell UK retailers was extraordinary. All responses were opened under the supervision of an independent solicitor who supplied an Affidavit verifying the results.

During this same period, 378 Shell gas stations operators in the US sued Shell Oil Company, Motiva and Equilon Enterprises alleging the companies

“used their dominant position in the marketplace to prevent the small business owners from successfully running their gas stations. “Shell has targeted these individual gas station dealers and has used illegal, strong-armed business practices to force these individuals out of business”…

It is clear that Peter Wittig and his fellow Shell retailers who suffered at the hands of Shell in Germany were not alone – “strong-armed business practices” were used by Shell on an international basis against Shell dealers, retailers and agents who were misled into believing they were dealing with an honest multinational company.

We have printed below a Google Translation from German to English of a letter received from Joachim Peter Wittig, who for several years, operated a Shell petrol station in Germany. Although far from satisfactory, the translation does communicate the basic points being made by Peter Wittig. The original in German language is also provided. It is clear from what is stated that Mr Wittig does not believe the deeds of Shell management match with the pledges of honesty, integrity etc proclaimed in Shell General Business Principles.

By “Jo Blow”, a Shell/Motiva Insider.

I was asked to provide commentary on the email below which is a Shell/Motiva leaked email provided to this site by another insider.  This email is believed to be authentic and authored by the sender Tom Purves, Regional Vice President of Downstream Manufacturing for The Americas Gulf Coast Region.  The email was sent to the General Manager of the Motiva Norco Refinery, some site and corporate business planning people, and several finance people.

The purpose of the email appears to outline key cost reduction and margin improvement opportunities along with associated dollar values as it relates to integrating the Shell Norco Chemical Facility with the Motiva Norco Refinery. These two sites are situated side by side along the Mississippi river just outside of New Orleans Louisiana.  This will not be the first time in the history of these sites that they have operated as an integrated facility.

In the email Mr. Purves outlines his expectations for what is to be included in the business plan as it relates to integration of the sites.  It is not surprising that staff reductions in the salaried ranks is recognized as a key cost reduction driver in integrating the sites.  With the sites operating as an integrated facility, the other improvements mentioned in the email should be fairly easy to realize.  This email seems to confirm the following quote from a recent blog posting by “Norco Scum”.

“Now Purves has demanded an additional $2 million in personnel cuts from each of SCC and Motiva at the site by the end of the year, beyond the SPI target. So, hang on, more to come.”

However painful of an exercise this is, the benefits for integrating the sites will actually deliver a strengthened position for the Norco Site within the downstream asset portfolio.  Shell/Motiva must position itself in the short term to weather the current business environment, which is forecast to continue for the next few years.  The cost reduction initiatives already initiated, and the yet to be implemented cost reduction initiatives will likely mean the difference between posting a profit or posting a loss for manufacturing.

In closing, I would like to offer a couple of my observations and opinions as it pertains to this email.  At face value the email and its directed actions is exactly the sort of communication I would expect from Mr. Purves or any other Senior Executive with similar responsibilities.  Tough as it will be from a personnel standpoint for those affected, it will benefit the many that will not be affected.  To realize the savings in maintenance synergies, tankage utilization, and hydrocarbon margin improvement mentioned in the email, it will take the dedicated employee’s at Norco to identify and implement the nuts and bolts of these opportunities both during and after integration.  When you put that in perspective, it becomes paramount to the integration plan’s success for Mr. Purves and his Team to properly manage employee engagement.

LEAKED EMAIL FROM TOM PURVES, SHELL/MOTIVA VP, Manufacturing Gulf Coast

—–Original Message—–

From: Purves, Tom SOPUS-DMG-DMM

Sent: Saturday, August 29, 2009 1:04 PM

To: Ainsworth, Anne-Marie N MOTIVA-DMM/6; Bundick, Hermie L SCC-DMG/8; Howell, Art SDIUS-DFM/675; Co, Quennie L SDIUS-DFM/67; Marczak, Kristin M MOTIVA-DMM/647; Henning, Laurel F MOTIVA-DFC/13

Cc: Bolter, Anthony J SDIUS-DFM/7; Luijten, Marcel P MOTIVA-DVM/3; Pease, Robert W MOTIVA-DVM

Subject: Business Plan Premises for Norco Site Integration

I have now read through and digested all of the notes that have gone around among many of you while I was on vacation. Here is what I would like to build into the business plans for both Motiva Norco and Shell Norco regarding site consolidation.

Salaried Staffing Synergies – reduction of salaried staff and management between the two sides over and above what is already premised with the SPI 100 efforts that have been pursued independently thus far. I recognize that there have already been some limited departmental level consolidations. The premise number to be used in the plans will be $4mln per year split equally between Shell and Motiva. I expect the sites to translate this into specific reductions in people once the site is consolidated. I will need a preliminary estimate of how this is going to happen for discussion in the biz plan. You can bring that to the challenge sessions.

Maintenance Synergy – includes better contractor utiliztion through integrated planning and scheduling, single point control of contract resources, consistent prioritization and supervision and a significant improvement in the use of maintenance material. This is over and above what has already been achieved by the two sites independently. The premise number will be $8mln per year split equally between Shell and Motiva.

Tankage Utilization Improvements – includes reduced tankage rationalization and optimization of working capital including short term opportunities for segregations, additional storage or other movement opportunites to take advantage of the immediate marketplace. This is largely a margin capture item. The premise number will be $1mln per year split equally between Shell and Motiva.

Hydrocarbon Margin Capture Through Unit Operating Options – includes stream routings and unit operational options that create short term opportunities to capture value in the immediate marketplace. This is entirely a margin capture item. The premise number will be $10mln per year split equally between Shell and Motiva.

Thus the benefits we will build into the plan will reflect a $12mln savings for each site in 2010 over what we would have built for each site independently.

I have seen some notes that escalate the margin capture year on year. I am open to that possiblity but I don’t see how that is going to happen beyond the general growth in margins. To that end, if we want to escalate the $10mln in margin savings at 2010 premise margins to “margin of the year”, I could support that. I’d like Tony and Marcel to weigh in on the appropriateness of that approach.

Kristin, Quennie/Art – we will need a specific slide to descirbe this in both the Motiva presentation and the Global M material. Not sure how to translate this into the templates so I leave that to you.

If anybody has a concern or question, please raise it quickly. Thanks…

Tom Purves

Vice President Manufacturing Gulf Coast

Houston One Shell Plaza Room  1236B

Office Telephone              713-241-6363

US & International Cell     713-301-5042

Ed O’Keeffe Photography

On 18 August, The Sunday Times published an article: “Essar bids for British oil refinery in Shell auction“. It revealed that “Essar, the Indian energy, steel and shipping group, has made a bid for Royal Dutch Shell’s Stanlow refinery at Ellesmere Port…”

The unionised group at the refinery held a general meeting last night regarding the plan, under the Voser restructuring process, to sell the refinery (and its workers) to the highest bidder. A related self-explanatory leaked email is published below.

A unanimous decision was taken that in the event of a sale, the membership will fight to maintain all current terms and conditions, including pension entitlements, which Shell have insisted will not be transferred under the TUPE agreement to the prospective buyers. Potential bidders include a consortium led by the National Oil Corporation of Libya.

Union representatives met  this morning with Frank Willsdon, Stanlow General Manager, to convey the result of the general meeting and to ask that he makes the Stanlow sales team aware of this development, so that interested parties are fully aware of the developing situation.

LEAKED EMAIL

—–Original Message—–
From:     Wood, Ron P SUKOP-OMP/11/06
Sent:    09 September 2009 21:48
To:
Subject:    General Meeting Result

All,
At the General Meeting held tonight Alan Rowlands gave a report back on our recent visit this week to meet with our Ineos, Grangemouth colleagues. The advice and information we have received from them has been invaluable in preparing us for the forthcoming negotiations we will be having.

Following a lengthy debate the following resolution was made.

“We the members of the collective bargaining agreement are resolved that in the event of any sale of Stanlow by Shell to a third party we will fight all proposed changes on any issue, especially our pensions entitlements, that would in any way be detrimental to our members.”

This was accepted, without abstention, by all in attendance.

Regards,

Ron Wood
Branch Secretary NW/428 UnitetheUnion
www.unitetheunion.com

Stanlow Manufacturing Complex, PO Box 3, Ellesmere Port, South Wirral CH65 4HB, United Kingdom

Tel: +44(0)151 350 4500
Email: Ron.Wood@shell.com
Internet: http://www.shell.com/uk

We are in possession of current information relating to the pending sale of the Shell Stanlow Refinery (and its workers) to the highest bidder.

It includes information about a meeting held last night and a related meeting taking place at the refinery today.

We also have a current related Shell internal email.

All will be published, hopefully later today, provided we receive permission from our insider sources.