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The Guardian: Shareholders prise Shell open

The Guardian: Shareholders prise Shell open

Mark Tran

Thursday June 17, 2004

The embattled oil giant Shell today bowed to pressure from big shareholders to provide details of its corporate governance review.

The company has been forced to look at its whole management structure after it shocked investors in January when it slashed its proven oil and gas reserves by a fifth. Other, smaller reserve cuts dealt further blows to shareholder confidence.

The downgrade resulted in the resignation of the chairman, Philip Watts, and other top executives and has sparked an investigation by US regulators.

Shell announced a review in March but powerful shareholders have criticised the process for a lack of transparency.

To meet those concerns the Anglo-Dutch group revealed the terms of reference of the review and the names of the people involved in scrutinising the behemoth’s inner workings.

Shell said it planned to make results of the review public in November and that it would put into effect any resulting changes after its annual shareholder meeting in 2005.

It said it would consider simplifying its board structure, a move investors have long sought.

“A number of possible structures, and improvements to decision-making, accountability and enhancement of effective leadership, are under active consideration,” the company said in a statement.

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

Shell revealed details of the review after pressure from shareholders, particularly from the Californian pension fund Calpers and US asset manager Knight Vinke.

In a letter published in the Financial Times yesterday they called on Shell to release more details or expect hostile questioning from investors at its dual annual meetings on June 28.

In its statement, Shell said the review group consisted of officials from the boards of both parent companies: Maarten van den Bergh, Sir Peter Job, the chairman, Sir John Kerr, Jonkheer Aarnout Loudon and Jeroen van der Veer.

This steering group is being helped by a working group of senior executives that includes the company’s legal director, the head of group taxation, the group treasurer and the corporate secretaries.

Outside advisers, including law and tax firms and investment bankers, are also being consulted on an ad hoc basis.

The terms of reference are to look at ways to simplify board and group management structures, improve decision-making processes and accountability, and make leadership more effective. Shell has been dogged by criticism that its board structure is inappropriately arcane.

http://www.guardian.co.uk/business/story/0,3604,1240994,00.html

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