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Shell urged to bring investors into review

Financial Times: Shell urged to bring investors into review

By Sundeep Tucker and James Boxell in London

Jun 25, 2004

Two powerful shareholders in Royal Dutch/Shell have raised the temperature ahead of Monday’s annual meetings by calling on the company to include investor representatives on the committee that is reviewing its governance and structure.

The demand is contained in a letter, seen by the Financial Times, sent to Shell this week detailing fresh concerns about the review process.

It comes as the oil giant yesterday announced the appointment of Peter Voser, a former Shell accountant, as its chief financial officer. He joins from ABB, the Swiss engineering group, where he is finance director. Mr Voser replaces Judy Boynton, who was dismissed in April.

Last week Shell bowed to shareholder pressure and named the five senior executives on the governance review, whilst also committing itself to reviewing its complex Anglo-Dutch board structure.

But the announcement has failed to satisfy the concerns of some investors, who are promising to outline their objections at the annual meetings.

In the letter the shareholders – Knight Vinke, a US asset manager and Calpers, the giant US pension fund, which Knight Vinke is representing at the meetings – point to ongoing worries over the “transparency and impartiality” of the process and call on Shell to consider including two individuals “proposed by investors” on the review team.

The letter also calls on Shell to provide a “detailed understanding of the measures that are under consideration”.

Shell said last week that “nothing was ruled out” but the two want to know specifically if the review is considering both the abolition of the committee of managing directors and the appointment of a “true” group chief executive formally accountable to a unified group board.

They wrote their first joint letter last week before Shell’s announcement, criticising the secrecy around the review.

The third demand in the latest letter is that the entire review process be speeded up and that the committee report back in September, not November.

“Could some recommended remedial measures not be implemented more expeditiously?” asks the letter’s author, Eric Knight, of Knight Vinke.

The letter ends: “We will be attending the meetings and intend to participate actively and constructively.”

Shell maintains that it satisfied investors with last week’s announcement. Meanwhile, analysts welcomed the appointment of Mr Voser, who worked for Shell for 20 years, and described him as “a safe pair of hands”.

In London, shares in Shell Transport & Trading, the UK arm, gained 8¾p to 417¼p. Royal Dutch/Shell shares added 47 cents to close at €43.30 in Amsterdam.

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