Sunday, June 20, 2004

Royal Dutch Shell bows to investor pressure on structure

Royal Dutch Shell has been known for years for its outstanding top management.
- However, at January 9th, 2004, Shell had to announce that it's oil reserves were smaller than indicated for years in its annual reports. The company turned out not to own 19, but only 15 billion barrels of oil reserves.
- A number of top executives including the CEO (Mr Phil Watts) were dismissed and Mr Jeroen van der Veer took over as CEO.
- At the 31st of May, Van der Veer says Shell must become more modest and must win back the trust of investors and business partners, besides implementing procedural and accounting measures to prevent incorrect bookings of oil reserves.
- However, at the 10th of June, Calpers (a huge pension fund and major shareholder) demands that Royal Shell changes its top structure, and will allow shareholders to make proposals for topmanagers and board members.
- At the 17th of June 2004 and after some debate, Jeroen van der Veer announces an evaluation of the governance model of Shell. The results will be announed in November this year.
- The Financial Times writes about this on the next day: "Shell bows to investor pressure on structure - Royal Dutch/Shell yielded to shareholder pressure yesterday, signalling reform of its structure and committing itself to abandon one of the most controversial features of the way it is run. Royal Dutch, the dominant partner in the embattled Anglo-Dutch oil company, surprised and pleased investors by announcing that it would scrap its much-criticised priority shares, which carry extra voting rights controlled by the company's management. It also revealed that, as part of a review into its governance, the company would consider simplifying its complex dual-board structure".
What do you think about the Leadership Mr Van der Veer is showing so far? Do you believe his ideas on modesty which he seems to bring into practice himself will indeed bring back the trust of investors or would you recommend another leadership style?


Blogger Zach007 said...

Today (June 28th, 2004) a Dutch newspaper writes: Jeroen van der Veer has been trying for months now to calm down muttering investors. At this moment Shell has lost control over the process. (...) According to analists Shell can only regain control over the process after a thorough cleanup operation, which has to go consideraby beyond the 3 managers that were sacrified so far.

9:26 PM  
Blogger Zach007 said...

In the Royal Shell shareholdersmeeting on the June 28th, Aad Jacobs, Chairman of the Supervisory Board of Royal Dutch, said "Shell now has the leadership that is required".

11:17 AM  
Blogger Zach007 said...

Standard & Poor's has raised the pressure on Shell to improve its corporate governance, warning the oil giant that its credit rating will be cut unless "effective" reforms are introduced.
Standard & Poor's, which cuts its ratings on Royal Dutch/Shell debt after the reserves debacle at the Anglo-Dutch company, said that it had ended a review of whether further downgrades were needed.

7:02 PM  
Anonymous Anonymous said...

Royal Dutch/Shell, one of the world's largest oil companies, agreed on August 24th, 2004 to pay $120 million in penalties to settle charges of corporate fraud with the Securities and Exchange Commission for overstating its oil reserves.

The Anglo-Dutch company also agreed to spend $5 million to update its internal compliance programs and pay another $30.5 million to British regulators.

Van der Veer proves his leadership. Well done, don't fight battles you can't win, get it over with.

9:11 AM  

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