London Evening Standard: Speed up reform, Shell warned

15 June 2004

BIG investors have given Shell a blunt warning that it must speed up its reforms and give more information about an internal review into its board structure.

Shareholders have said the oil giant's refusal to name those on its review working party is 'ridiculous'. They are demanding that it divulge the names and terms of reference of the review.

Investors fear conservatives in the Dutch arm of Shell are resisting change. Others appear to have received the message that the game is up for its complex dual board structure, which many hold responsible for its governance failures.  

Fund managers, traditionally reluctant to challenge management openly, are preparing to put Shell directors through the wringer at the annual meeting in two weeks. They say the reform process is unclear and lacks urgency.

The latest concerns mark a second stage of the crisis which began in January when the reserves scandal erupted.

The heavyweight Association of British Insurers has put Shell on an 'amber' rating - some issues of concern - and warns that the annual meeting could be 'difficult'.

The ABI's Peter Montagnon said: 'The meeting is a milestone. If Shell cannot be clear, there is a risk that it could be stormy.'

Some big investors insist that Shell's whole bonus structure is overhauled, believing it encouraged the inflation of reserves. Others want a unified board under an outside chairman.

Shell is schmoozing investors ahead of the annual meeting. Montagnon said: 'It is important for dialogue to continue.'

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