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Investors set for Shell showdown

TimesOnLine: Investors set for Shell showdown

Louise Armitstead

June 20, 2004

Posted 21 June 04

INSTITUTIONAL shareholders in Shell, the embattled oil giant, are planning a public showdown with the company’s management at its annual meeting next Monday. Despite Shell’s efforts last week to meet some of its investors’ biggest demands, fund managers say they will attend the meeting to press for more transparency.

Shell’s biggest investors, which include Isis, M&G, Scottish Widows, State Street, Merrill Lynch and HSBC, have welcomed Shell’s announcement that it would move towards merging Royal Dutch and Shell Trading & Transport, but they still have concerns.

“Shell is moving in the right direction of better governance,” said one leading investor. “But we feel very uncomfortable with its announcement that it won’t update us again until November. There is no reason why it should take five months, and it is important that it’s not done in secret.”

Investors also want to use the annual meeting to ask questions on issues such as the pay-offs given to Shell’s ousted executives, the investigation by America’s Securities Exchange Commission and the company’s internal review.

The Association of British Insurers (ABI), the shareholder trade body that has facilitated meetings between Shell and investors, is preparing to issue an “amber top” alert to members, indicating its concerns ahead of the meeting.

Peter Montagnon, head of investment affairs at the ABI, said: “Although we have no specific concerns on the resolutions proposed by Shell, the issues surrounding the company are such that we feel a warning to investors is needed.

“Although we are pleased with the latest announcement from Shell, institutions want to go to the annual meeting to make their degree of interest clear. They also want to be kept updated over the summer.”

One leading shareholder said: “Shell has to understand that the presumption of trust between us has been destroyed in the past six months. It needs to be rebuilt. This will involve transparency and dialogue.”

Last week Shell bowed to pressure and published some details of its corporate- governance review in advance of next week’s annual meeting.

The company said it was considering ending its dual-board structure and appointing a chief executive. Favourite for the post is Jeroen van der Veer, who is currently chairman of Shell’s committee of managing directors.

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