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THE NEW YORK TIMES: Shareholders Approve Shell Unification

THE NEW YORK TIMES: Shareholders Approve Shell Unification

28 June 2005

By THE ASSOCIATED PRESS

Published: June 28, 2005

THE HAGUE, Netherlands (AP) — Shareholders overwhelmingly approved the unification of the Royal Dutch/Shell Group of Cos. on Tuesday, an attempt by the world’s third-largest oil producer to recover after a scandal over restated reserves.

Some 97.4 percent of shareholders in the Netherlands and 96.38 percent in London voted in favor of ending a century-old dual corporate structure at the Anglo-Dutch company.

”The opportunities for simplification and quicker decision making and clearer accountability are tremendous, and I think it’s going to make a huge difference,” said Malcolm Brinded, Shell’s executive director for exploration and production.

The Royal Dutch/Shell businesses have been managed as a single unit since 1907, but are owned by two parents, Shell Transport & Trading Co. Ltd., which holds 40 percent, and Royal Dutch Petroleum Co., which holds 60 percent.

The parent companies will now be merged to form the supervisory board of a new company. It will be named Royal Dutch Shell PLC and be based in London, though its physical headquarters and tax home will be in The Hague.

Shareholders will receive holdings in the new company on a one-for-one basis. The stock is scheduled to trade on international exchanges under the new name beginning July 20.

Many shareholders at the London meeting were unhappy about a capital gains tax that is going to hit British investors who hold Royal Dutch shares. Others expressed concern about being paid dividends in euros rather than the stronger pound. Several also questioned whether they would still be able to participate fully in the combined company’s meetings.

Market watchers generally approve of the streamlining of management and more transparency, but positive sentiment over Shell’s recent results has been tempered by the repeated cutting of reserve estimates. In February the company announced the fifth restatement in just over a year. In all, reserves have been cut by 6.85 billion barrels to 11.9 billion barrels at the end of 2004.

Shares in Shell Transport & Trading gained 2.8 percent to 5.43 pounds ($9.95) in London, while Royal Dutch Petroleum shares rose 3.2 percent to 54.70 euros ($66.53).

After an opening speech by Chief Executive Jeroen van der Veer at the seaside resort town of Scheveningen near The Hague, scores of activists from Texas to the Philippines grilled management board members about social and economic damage they blamed on Shell’s ”reckless pursuit of profit.”

”I see very decent-looking people who I believe want the best thing for themselves and the rest of humanity, said Isaac Osoko of Nigeria. ”I don’t think that the shareholders will accept that it is for the profit that they share that our lives have been destroyed.”

”Shell has learned nothing in the 10 years since Ken Saro-Wiwa and his comrades were executed,” said Maura Harrington of Ireland, referring to the hanging death a decade ago of nine activists including Saro-Wiwa.

Saro-Wiwa was a Nigerian activist, writer and Nobel Peace Prize nominee who founded the Movement for the Survival of Ogoni People, an ethnic-minority group which accused the Nigerian government and oil companies of degrading the environment while offering few job options for farmers and fishermen whose lands and waters were polluted.

Earlier this month, militants in southern Nigeria kidnapped six oil workers and demanded $20 million from Shell that the company had promised as compensation for pollution and environmental degradation due to oil activities. They were later released.

The London meeting was briefly interrupted by half a dozen environmental protesters who took off their shirts to reveal black T-shirts with the Shell logo and name minus the ‘S.’ They chanted ‘We must fight on’ before being escorted out by security.

Shell board members stressed that the company is committed to reducing damage to the environment. Board member Linda Cook said Shell will invest $1 billion in wind and solar technology in coming years.

AP Business Writer Jane Wardell in London contributed to this report.

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