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Reversal of fortune for Shell/Nokia Chairman, Jorma Ollila

By John Donovan

In August 2005, Royal Dutch Shell Plc announced the appointment of an “outsider”, Jorma Ollila, as its non-executive Chairman.

In announcing Mr. Olilla’s appointment, Shell’s board highlighted the infusion of fresh blood. “We were looking world-wide for a chairman with international standing, a global outlook, and proven success in managing a complex organization,” said Lord Kerr of Kinlochard, Shell’s deputy chairman, who led the job-search committee. “In Jorma Ollila we found all these qualities, and more.”

(Extract from a Wall Street Journal article published on 5 August 2005 headlined: “Shell Names Nokia’s Ollila As Nonexecutive Chairman In Move Towards Overhaul“)

Ollila must have been elated at his unique position, being simultaneously Chairman of two of the worlds most notable companies, with iconic global brands, Shell and Nokia.

All has not panned out as intended.

Ollila attracted criticism for acquiescing in excessive increases in Royal Dutch senior executive remuneration, including bonus payments being paid although performance targets had not been met. The issue sparked an outcry from shareholder activists.

Shell was engulfed in controversy at its annual meeting in the Netherlands on Tuesday when 59% of shareholders opposed its remuneration report. Bonuses were paid to directors despite performance targets being missed.

(Extract from a Guardian/Observer article dated 24 May 2009 entitled: “Shell board told to pay back bonuses

In August 2009, a retired Shell International HSE Group Auditor, Bill Campbell called Ollila’s integrity into question, challenging him to issue defamation proceedings.

More recently, there has also been turmoil at the top of Nokia, with the companies reputation for innovation in meltdown.

Extracts from International Business Times article published 9 February 2011:

Stephen Elop, the chief executive at Nokia, has made it clear: the Espoo, Finland-based company needs to get its act together soon or its failures in the smartphone industry will only get worse.

In a memo, obtained by several media sources, Elop compared the company to an oilman standing on a burning platform. He said the company has fallen far behind Apple and Android in the high-end smartphone market, made little impact in North America in the mid-range market and lost share to MediaTek in low-cost phones. He said as competitors caught up and surpassed Nokia, the company missed big trends and made wrong decisions.

“We poured gasoline on our own burning platform. I believe we have lacked accountability and leadership to align and direct the company through these disruptive times. We had a series of misses. We haven’t been delivering innovation fast enough. We’re not collaborating internally,” Elop wrote.

One wonders if the oilman being referred to is Jorma Ollila. His record at Royal Dutch Shell and Nokia does not inspire confidence. He agreed last year to depart from Nokia in 2012 as part of management changes. In view of  the deteriorating situation at the company, it will come as no surprise if the departure date for this failed leader is brought forward. Under the circumstances, his future at Royal Dutch Shell may soon be open to question.

THE HEADCUT IMAGE OF JORMA OLLILA IS DISPLAYED COURTESY OF THE WALL STREET JOURNAL.

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