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Shell ponders merger of its companies

The Times: Shell ponders merger of its companies

By Carl Mortished, International Business Editor

June 18, 2004

SHELL is considering appointing a chief executive and merging its two separate businesses, Royal Dutch Petroleum and Shell Transport & Trading, for the first time in its century-long history.

It also emerged yesterday that it will reveal the name of its new finance director before the group’s annual meeting on June 28, and that to appease critics of the group’s tradition of internal hiring, the new chief financial officer is likely to be from outside Shell.

The Anglo-Dutch group, which was created when the two businesses agreed a joint venture in 1907, said yesterday that it is launching a major review of its management and corporate structure in a bid to appease shareholders.

Shell is currently managed via a complex committee of managing directors in a structure that came under fire after the revelation that senior executives conspired to conceal the misreporting of four billion barrels of oil and gas reserves.

It is widely expected that Jeroen van der Veer, who is head of the managing directors committee, would be awarded the top job at Shell.

As part of this upheaval, the oil multinational yesterday said that it would scrap the priority shares of Royal Dutch Petroleum, stripping the Dutch board of one of the planks of its corporate power within the group.

The century-old priority shares, which gave Dutch board members the exclusive power to nominate directors, have been criticised for being both a poison pill and a mainstay of Dutch establishment power.

Shell told the City yesterday that its new review had three objectives: the simplification of the board and group managing structures, improvements in decision-making and accountability, and enhancing leadership of the group.

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