Royal Dutch/Shell mulls single board: Gives details of review after shareholder pressure

CBS MarketWatch.com: Royal Dutch/Shell mulls single board: Gives details of review after shareholder pressure

By Steve Goldstein,

Last Update: 11:19 AM ET June 17, 2004

LONDON (CBS.MW) — Embattled oil giant Royal Dutch/Shell said Thursday it expects to complete its corporate revamp plan ready by November, and is considering the formation of a unified board.

Calls to reform what is seen as an unwieldy structure have increased amid the group’s reclassification of oil reserves, which occurred for the first time in January. The company is now faced with several legal probes, both by U.S. and European regulators and by private investors.

Under the present structure, 60 percent of the company is held by Royal Dutch (RD: news, chart, profile) of the Netherlands, while 40 percent is controlled by Shell Trading and Transport (SC: news, chart, profile) of Britain, a structure created in a 1907 merger.

“Amongst other alternatives, forms of unified boards, to which a CEO would report, are being studied. Nothing is ruled out at this stage,” the company said in a statement.

The company said it was looking to come up with a plan by November, and then consult investors with the idea of approving changes by the 2005 annual shareholder meeting.

“We think investors will consider the process rather slow,” said a note from Dutch broker SNS Securities.

Maarten van den Bergh, Peter Job, John Kerr, Jonkheer Aarnout Loudon and Jeroen van der Veer will head the panel examining a possible revamp, the first time the company has revealed who was examining the different possibilities.

It also said it would scrap its system of priority shares, which carry more voting weight.

The statement was a direct response to a letter in the Financial Times from Ted White of pension fund Calpers and Eric Knight of Knight Vinke Asset Management on Wednesday, who said that they and many other institutional investors blame the reserves debacle in part on “the prevailing governance culture of the group and the absence of orthodox board structures.”

They called for terms of reference of the review, the composition of the body conducting it, and a timetable.

Amsterdam-listed shares (NL:00947: news, chart, profile) rose 1.5 percent and London-listed shares (UK:SHEL: news, chart, profile) firmed 0.9 percent, with rising oil prices underpinning an advance for the entire sector. See Europe Markets.

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