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Shell/Nokia

THE WALL STREET JOURNAL: Shell/Nokia

“Mr. Ollila will be paid £500,000 (€720,000) a year — the going rate at FTSE-100 firms. Compare that to what the chairman of Shell’s U.K. arm earned the year before last — a mere £55,000. Is it any wonder that after last year’s oil-reserves scandal, investors believed that Shell management was asleep on the job?”

Friday 5 August 2005

Edited by Hugo Dixon
August 5, 2005

Nokia’s former chief executive is a good choice to become Royal Dutch Shell’s first outside chairman. Jorma Ollila may not know much about oil. But he knows a lot about transforming companies, internationalizing management and listening to shareholders. These are all qualities that sleepy Shell has long lacked. He also knows a lot about returning cash to investors, managing a global firm and maintaining profitability in an increasingly competitive industry. These are qualities that Shell also needs in the ever-tougher oil world. (See related article.)

If one boils down Mr. Ollila’s time at Nokia to a single decisive moment, it was his decision to bet the company in the early 1990s on what was then viewed as a marginal technology. In doing so, he transformed a small Finnish maker of Wellington boots and rubber tires into the world’s biggest manufacturer of mobile phones. Shell doesn’t need similar radicalism. But Mr. Ollila’s track record suggests at the very least he will bring some welcome new-broomism to the oil giant, which has long been hamstrung by an introspective and convoluted management structure.

Until two weeks ago, the company had two chairmen — one for its Dutch arm, and another for the British part of the group. As a result, it was almost impossible for these chairmen to steer the board and transmit investors’ concerns to its members.

Now, Shell has unified its century-old dual structure with a single chairman, a proper job to do, and a salary to match. Mr. Ollila will be paid £500,000 (€720,000) a year — the going rate at FTSE-100 firms. Compare that to what the chairman of Shell’s U.K. arm earned the year before last — a mere £55,000. Is it any wonder that after last year’s oil-reserves scandal, investors believed that Shell management was asleep on the job? You get what you pay for.

And if Mr. Ollila manages to instill anything like the mindset at Nokia — which, unusually for a tech firm, paid out at least a third of its earnings as dividends and deployed much of the rest as buybacks — Shell’s investors should be well rewarded, too.

This website and sisters royaldutchshellgroup.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, and shellnews.net, are owned by John Donovan. There is also a Wikipedia segment.

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