The Sunday Telegraph: What Watts must do to avoid ejection from Shell
By Robert Peston, Sunday City Editor
(Filed: 08/02/2004)
I was particularly curious to meet "Where's Wattsy?", the oilman who couldn't be spotted last month in the crowd of Shell spokesmen vainly trying to explain how 3.9 billion barrels of reserves vanished when the company went to look for them.
Would Sir Philip Watts, the chairman of Shell, be a man with two heads or would he be squeezed inside a voluminous business suit with his Dutch opposite number? My surreal musings were prompted by Shell's barmy press release, which attributes identical quotes to two people, Watts and Jeroen van der Veer, the president of Shell's conjoined sister, Royal Dutch.
The conceit - that these two executives spout shareholder-friendly clichés in unison - is redolent of a business whose grip on reality is being tested by the need to demonstrate that its bifurcated, Byzantine structure makes sense.
However, Watts gave a solid and reassuring account of Shell's long-term prospects, except in one vital respect. He insisted that no one was personally accountable for the misjudgments in the late 1990s which led Shell to significantly overstate its proven reserves.
There are two possible explanations. Either he is in denial about his own culpability. Or this company has a culture and structure that makes it impossible to attribute responsibility to anyone for anything.
It's probably a bit of both - which is troubling, given that the propaganda out of Shell over the past few years is that it has created a "performance culture". Or to put it another way, Shell paid bonuses to executives for boosting reserves.
So, at the risk of sounding horribly old-fashioned, anyone who was rewarded for finding the black gold should also be spanked when it disappears in a puff of accounting smoke.
That said, the instinctive reaction of shareholders, that Watts should be hoist from the nearest drilling rig, would be unwise. However much he is at fault, I'm persuaded that he is their best hope of making this company less insular and less arrogant.
When they meet him in the next few weeks, they should strike a clear bargain with him: he can serve out his remaining tenure with dignity, so long as he delivers a simplified boardroom structure that is capable of responding to their needs.