The Independent: Shell chief faces investors' wrath over reform at annual meeting

By Tim Webb

30 May 2004

Leading shareholders in Anglo-Dutch company Shell are threatening to vote against the chairman, Jeroen van der Veer, at its Dutch annual shareholder meeting next month.

Under Dutch listing rules, companies must ask shareholders to vote to "discharge directors of their responsibility" for their actions in order to approve its annual report.

Shell sent Royal Dutch shareholders the agenda last week for its annual general meeting. One prominent investor said he was considering not approving this motion as a protest against the board. Some senior Shell executives, especially Mr van der Veer, did not appear committed to significant reform, he said. It follows the scandal over Shell's misreporting of its oil and gas reserves, prompting investigations by the US Securities and Exchange Commission and the UK Financial Services Authority.

"There is the suspicion that, left to its own devices, Shell will go back to its old ways of 'ticking the box'. They are being very opaque," the investor said.

One Dutch investor-relations adviser said that if the motion was not passed, the directors would have no choice but to stand down, though this is unlikely.

Shareholders want the company to simplify its board structure. An investigation by Davis Polk, a US law firm, into the reserves scandal revealed a management structure lacking in sufficient accountability, transparency and controls.

Lord Oxburgh, the non-executive chairman of Shell Transport, will meet British institutional shareholders next month before the UK shareholder meeting, also at the end of June. He is understood to have told some shareholders frustrated with the slow pace of change that Royal Dutch directors are dragging their feet.

Finlay MacDonald of Britannic Asset Management said: "We would like to see a structure which more clearly defines the lines of responsibility and this may be easier within a unified group structure.

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