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Lex: Royal Dutch/Shell 17 June 2004

FT.com site: Lex: Royal Dutch/Shell

Jun 17, 2004

Posted 18 June 04

Lord Oxburgh, Shell Transport & Trading’s chairman, has voiced his fears for the planet unless something is done about greenhouse gas emissions. Shareholders must hope he takes as seriously their fears for Royal Dutch/Shell’s long-term future health unless something is done about the group’s corporate structure. The feeling remains that Shell is being dragged, kicking and screaming, into divulging basic information about its internal governance review, but it must be given credit for the concessions made.

The most substantive is the proposed abolition of Royal Dutch priority shares, which carry preferential voting rights. The move would bring Royal Dutch into line with the new Tabaksblat corporate governance code, which is based on a “comply or explain” approach. A move that is not a legal requirement is a particularly welcome step. Also welcome is consideration of a unified board structure and a commitment to publish the review’s results in November. But Shell’s boards will decide on the review before it is made public. The scope for real change will turn on their willingness to embrace it.

During the reserves scandal, Shell was adamant that its structure was not at fault. Recently it has at least admitted to past strategic mistakes. At meetings with investors last week, hosted by Deutsche Bank, Shell conceded it had been slow to pursue new opportunities, with too much focus on the long term. Hopefully these are early steps on the road to embracing a unified board structure.

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