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Shell asks publisher how to manage its Anglo-Dutch split

Daily Telegraph: Shell asks publisher how to manage its Anglo-Dutch split

“Executives at crisis-hit oil and gas giant Shell have approached Reed Elsevier for tips on how to copy its management structure”

By David Litterick and Christopher Hope (Filed: 20/09/2004)

Executives at crisis-hit oil and gas giant Shell have approached Reed Elsevier for tips on how to copy its management structure as the Anglo-Dutch group seeks ways to improve its corporate governance.

Sir Crispin Davis: completed the unification of Reed Elsevier’s boards

The news is the clearest signal yet that Shell is moving towards combining its two boards, as Reed has done, rather than spend hundreds of millions of pounds merging its UK and Dutch businesses.

The Shell directors are understood to have talked to both Sir Crispin Davis, chief executive of the publishing group, and Reed chairman Morris Tabaksblat in a series of meetings over the summer in London and Holland.

Shell, which admitted it had exaggerated its proved reserves by 23pc this year, is also believed to have contacted other companies with British and Dutch listings, including Unilever, the food group.

Shell will provide more guidance on a review of its structure – which is being carried out by a committee of non-executive directors – in November. A spokesman said: “All options are being studied. Nothing is ruled in and nothing is ruled out.” Reed declined to comment.

Reed, like Shell, has a complex corporate structure, with UK-listed Reed Elsevier plc and Dutch-listed Reed Elsevier NV having equal shareholdings in Reed Elsevier Group. However, in Reed’s case, the boards of all three companies are constituted in almost exactly the same way, ensuring continuity and efficiency in decision-making across the group.

Completing the unification of the boards following the merger was one of Sir Crispin’s first major achievements after becoming chief executive in 1999, ending a period of separate UK and Dutch management teams.

In contrast, Shell is controlled by two parent companies with different boards of directors. Shell Transport and Trading, listed in London, has 40pc of the business, while Netherlands-listed Royal Dutch Petroleum has 60pc. Separate boards and a convoluted management structure at Shell were partly blamed for the lack of controls that led to the overstatement of 4.47billion barrels of oil and gas.

The scandal led to the resignations of Sir Philip Watts, the company’s chairman of its committee of managing directors, as well as its finance director and its head of exploration and production. It also led to subsequent multi-million-dollar fines from the US Securities & Exchange Commission and the UK Financial Services Authority.

Jeroen van der Veer, Sir Philip’s successor, meets investors and analysts in London on Wednesday for the company’s annual strategy meeting.

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