Shell Considers Switch to CEO, Single Board
By Mike Oduniyi
Oil giant Royal Dutch/Shell is considering appointing an orthodox chief executive who will report to a single, unified board as part of the review of its complicated and much criticized board and gover-nance structures being carried out by the senior management.
The company said in statement at the weekend that a number of possible structures, and improvements to decision-making, accountability and enhancement of effective leadership, were under active consideration.
"Amongst other alternatives, forms of unified Boards, to which a CEO would report, are being studied. Nothing is ruled out at this stage, the statement said.
Shell said it had set up a Steering Group of five members drawn from the Boards of the two parent companies, to carry out "a consultative review."
The Steering Group it said, is assisted by a Working Group of senior Group executives, which includes the Legal Director, the Head of Group Taxation, the Group Treasurer and the Corporate Secretaries. Outside advisors, such as law and tax firms and investment bankers, are and will be consulted as appropriate.
The terms of reference are to review:
_possible simplification of Board/Group management structures
_improving the decision making processes and accountability
_enhancing effective leadership for the Group as a whole.
"It is the intention that results emerging from this review will be made public by the Boards in November 2004, after which a round of further and more focussed consultation with shareholders will be undertaken, so that the entire process is concluded in the shareholders meeting of 2005, for implementation immediately thereafter," Shell said.
The CEO plan would replace the current arrangement under which Shell's day-to-day running rests with a committee of senior executives, who also serve on the boards of the parent companies.
The system has come under fire from some investors, who believe it makes the company less accountable to shareholders.
Shell will go public with the results of its governance review in November, ahead of a round of "further and more focused" consultation with shareholders before its annual general meetings in April 2005.
The review's terms of reference were to look at "possible simplification of board/group management structures, improving the decision making processes and accountability, and enhancing effective leadership for the group as a whole," the company says.
Shell appears to have been bounced into making the statement by criticism from two of its institutional US shareholders, who wrote a letter to the UK's Financial Times calling on the company to make the corporate governance review more transparent.
While reform of its governance structures are under consideration, changes to Shell's oil and gas reserves management are moving ahead more swiftly.
Following last month's appointment of a new group reserves coordinator, Shell has now begun strengthening its internal reserves auditing function, a job previously left to a single, part-time engineer.
Reserves auditing will now be handled by a team of five, led by veteran Shell petrophysicist Paul van Ditzhuijzen. Shell is currently recruiting internally for the new beefed-up team and should have it in place by the end of this month.
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