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?